Homeownership to decline for future cohort of retirees

The share of 25- to 34-year-olds living independently and owning their own home fell from 60% in 2004 to just 27% in 2019, the ESRI said. Picture: Denis Minihane

The coming decades are likely to see a significant decline in homeownership, with just two-thirds of those currently aged 35 to 44 years likely to own their home by the time they retire.

That compares to 90% of those currently aged 65 or over, who own their homes.

New findings from the ESRI show the scale of the changing demographics in homeownership.

This is clearly seen in younger-aged households. The share of 25- to 34-year-olds living independently and owning their own home fell from 60% in 2004 to just 27% in 2019, the ESRI said.

“The findings [of the] report, while jarring, are not unexpected. Homeownership in Ireland has become an increasingly difficult attainment over the years, and, unfortunately, the myriad of issues impeding home purchase look unlikely to be resolved in the short to medium term,” said Karen Gallagher, head of proposition at Royal London Ireland.

Even for those who do manage to get some footing on the property ladder, the point at which they own their home outright and are mortgage-free has moved further and further away.” 

Such a dive in homeownership among future retirees could lead to an increase in older people living in income poverty, said Roma Burke, chair of the Pensions Council, which funded the ESRI research.

“If you don’t own your home by the time you retire, your living expenses are still going to be significant, even if your income falls. This could cause many more older people to be at risk of poverty in the future, unless action is taken to address this important challenge,” said Ms Burke.

The ESRI suggested that early-stage policy interventions are needed to bring down the costs of housing that future cohorts are likely to face in retirement. It also said that the introduction of additional financial supports may place significant costs on taxpayers given the scale of the projected fall in homeownership for future retirees.

It also said that non-market renting options such as cost rental can help to lower the cost of housing in retirement and reduce the share of retirees in income poverty.

“First-time buyers are getting older, and it’s not uncommon to see people in their mid-30s entering large value, 35-year mortgages. Unless they overpay during the term of their mortgage, many won’t have cleared this debt until they are into their late 60s or early 70s,” said Ms Gallagher.

“Such a scenario could seriously challenge their repayment capability in retirement, particularly if they haven’t an adequate pension to rely on.”