'Poorer for longer': Number of home buyers under 30 has halved since Celtic Tiger

Young people's chances of owning their own home before they reach middle-age appears to be slipping away, with new figures showing just 27% of first-time buyers last year were aged 30 or under.

Young people's chances of owning their own home before they reach middle-age appears to be slipping away, with new figures showing just 27% of first-time buyers last year were aged 30 or under – and amid concerns the housing crisis could impact on family growth, access to higher education and future support for the elderly.

A detailed mortgage report published by the Irish Banking and Payments Federation (IBPF) shows the percentage of mortgages issued to young people last year was less than half of that in 2004 at the height of the Celtic Tiger boom.

It comes amid ongoing concerns about the supply of starter homes and available properties in general, in tandem with spiralling rental costs and the impact of the pandemic on the ability of younger people to earn and save money.

According to the report, older borrowers are increasing their share of the mortgage market, and not just when it comes to starter homes. About one-third of mover purchasers were younger than 35 years of age in 2012 but by last year that proportion had dropped to 17%.

Prof Niamh Hourigan, sociologist and vice-president of academic affairs at Mary Immaculate College in Limerick, warned that younger people being priced out of the housing market could have a deeper and longer-term impact on Irish society, including whether people decide to start a family.

Rental market insecure

"People are reluctant to start a family when they don't own their own home," Prof Hourigan said, adding the rental market in Ireland was insecure compared to other countries where there is more secure rent control and fixity of tenure.

As for the possible impact on higher education for the next generation, she said: "That costs money and you do need to be sure that a certain proportion of income will be available.

"Food, clothing and shelter will always take priority. We could in the long term see an impact there.

"The final area, the one I'm most concerned about, is the long-term impact on elderly people.

We have done no planning around elderly people who don't own their own homes or are in rental accommodation."

Lorcan Sirr, senior lecturer at Technological University Dublin, said the current housing situation was "a direct result of housing, planning and fiscal policy".

He said younger people were being locked out of home-ownership, meaning they ended up living at home or in the rental system, with implications in other areas, including on how people accumulate wealth.

"If you lock them out of that you are keeping them poorer for longer and preventing them from having wealth to pass on to children," he said.

Rachel McGovern, director of financial services at Brokers Ireland, said there were signs the overall mortgage picture might have improved in 2021 but it was "extremely frustrating for people at that age, trying to purchase and they can't".

Lending limits a serious obstacle

Ms McGovern said the current lending limits on mortgages set in place by the Central Bank, and specifically the 3.5 times a person's salary lending limit, was proving a serious obstacle.

"If you multiply your salary by 3.5 it's probably not going to be enough to purchase a property, especially in Dublin," she said. "That is the major impediment that we are seeing."

She said the "wider issue" of property prices and affordability had to be tackled but that looking at someone's net disposable income as a measure of an individual's ability to repay a mortgage might be better than the "very crude calculation" of the 3.5 times lending limit.

Trevor Grant, chair of the Association of Irish Mortgage Advisors, said the suggestion had "some merit" but that the biggest issue was one of supply, especially of starter homes. He said raising the lending limits might just result in more people trying to buy the same house, thereby further inflating prices.

"Comparing mortgage data during the boom to now is like comparing apples with oranges," he said. "They are completely different times."

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He said changes to lending rules from the days of 95% and 100% mortgages would already have lowered the level of first-time buyers entering the market.

"Then throw on top of that the housing crisis, where we simply don't have enough starter homes in this country, it's like throwing petrol on the fire," he said.

"It's a double whammy."

A Central Bank review of the lending limits is ongoing and Mr Grant said: "What we need is a cohesive, holistic plan to address the cost of housing and equally ensure the cost of provision of mortgage finance available."