Bleak outlook as €90k salary not enough to buy a new home in Cork

With supply still an issue, even house-hunters with incomes of almost €90,000 will continue to struggle to buy a home in many locations, an SCSI report has stated.
Bleak outlook as €90k salary not enough to buy a new home in Cork

Estate agents signs outside an estate in Clane, Co Kildare. Picture: Colin Keegan, Collins Dublin

A couple on a combined salary of €89,000 will still face a shortfall of €30,000 when it comes to buying a new home in Cork, even with the aid of help-to-buy supports.

The rate of house-price increases is expected to fall to 4% over the next year, but many people will remain priced out of the market until there is a sufficient supply of homes to meet demand, according to a report by the Society of Chartered Surveyors Ireland (SCSI).

The report also outlines affordability scenarios for various counties such as Cork, Kildare, and Meath and shows that even house-hunters with incomes of almost €90,000 will struggle to find a home in many locations. 

The SCSI said a couple on a combined salary of €89,000 who want to buy a new home and who have the 10% deposit having availed of the Help to Buy relief, will still face a shortfall of €30,000 in Cork where the average price of a new three-bed home in suburban locations such as Ballincollig, Blarney, and Glanmire is €380,000.

The situation was worse in Kildare where the same couple would face a €64,000 shortfall, as the average price is €418,000. Only in Meath, where the average price is €340,000, would the couple be able to afford an average new home.

Challenging

“These figures show that buying an affordable property remains out of reach for thousands of Irish people on average salaries looking to buy their first home,” said SCSI practice & policy committee chairman John Sullivan.

"Of course, you are also going to have thousands of people on salaries below this level.

Unfortunately, with construction costs continuing to spiral and interest rate increases on the way, it looks as if the situation facing first-time buyers is set to become even more challenging.” 

“While we have limited control over global supply-chain issues and the cost of imported materials, we do have control over issues such as planning, procurement, utility connection charges, VAT, and development contributions. 

"We know from previous SCSI reports that these soft costs make up around half the cost of delivering a new home, and these are the areas the Government and local authorities need to focus on if we want to reduce the costs of delivering new homes.”

House price inflation slowing

The one positive from the report was the result of the SCSI survey of its members who forecast that house price inflation will moderate to a 3% increase over the quieter summer months and remain at 4% for the next 12 months.

Speaking to the Irish Examiner, TJ Cronin of estate agent Irish & European in Cork said supply was the overriding factor when it comes to high prices.

"The lack of supply for all categories of homes is the key issue," he said. 

It is heartening to see increased levels of new home construction, but this will take time to have an impact on prices.

"We have seen many people priced out of new homes and instead turning to the second-hand market with plans to renovate and upgrade. 

"But there is a significant shortage on the secondary market as well. Increasing the supply of homes is what will remedy this crisis."

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