Sean Murray: It's 50:50 if I'll ever own a home
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At this stage, it’s literally the toss of a coin on whether I'll ever own a house.
For people aged 25-34 — a category I fall very neatly into the middle of — we have a one in two chance of becoming homeowners by the time we reach retirement age, according to the Economic And Social Research Institute (ESRI).
This compares to current pensioners, where home ownership is in the region of 90%.
This will have real-world impacts beyond simply just “not owning a house”.
The ESRI said as many as one in three households could be in income poverty by the time they’re over the age of 65.
Put simply: The people who don’t own their home at that age will be more at risk of poverty because they still have to meet high housing costs even as their income drops after they retire.
Like myself, a lot people regularly go onto mortgage calculators that banks have on their websites. I did it again last night.
I put in my income, no dependent children, no loans.
From what they could give me, I’d need another €120,000 to be able to afford a house in the area I grew up in.
And, according to Central Statistic Office figures, the D10 Eircode I grew up in is the cheapest place to buy in Dublin. I wouldn’t be able to afford to buy a house near any city in Ireland.
So I can forget about going it alone to buy a home.
A report from KBC earlier this year said that an income of nearly €100,000 was needed to buy a home in Dublin.
Between us, myself and my partner earn just too much to qualify for the Government’s Local Authority Home Loan scheme.
We’d be eligible for Help to Buy but they’re only on new builds.
On Daft.ie yesterday, there were 33 new builds listed for sale in Dublin. The cheapest was €372,500. And, quite frankly, I don’t think I even want to know how much the ones that say 'price on application' are costing.
We both earn a wage that allows us to pay rent, cover all our bills and keep the fridge well stocked while still putting a bit away every month. But we’re nowhere near affording that.
Housing Minister Darragh O’Brien has said that a new shared equity scheme being launched today will be a “game-changer” for those trying to get on the property ladder.
He said it’ll be able to “bridge the gap for people between the finance they have — so the mortgage approval they may have and their savings — and the finance that they need by the State taking that equity”.
I’d love if he was right.
The same way I’d have loved it if then Housing Minister Simon Coveney was right when he said the use of hotels and B&Bs for homeless families would be stopped by July 2017.
Or when Minister for Housing Eoghan Murphy told the Dáil that housing supply would increase to 25,000 units a year in 2020.
In the first case, families continue to stay in hotels. In the second, well, housing supply has never reached that figure. In 2019, it got to its highest level in years at 21,047. In both 2020 and 2021, just over 20,000 new homes were built.
In the case of Mr O’Brien’s game-changing scheme, our aforementioned colleagues at the ESRI fear that such a shared equity scheme may push prices even further upwards. The Central Bank has similar reservations.
And, again, in the aforementioned Help to Buy Scheme, the reported last month that a third of the people who’ve availed of the scheme didn’t even need it for their deposit and that it may have played a role in property price inflation.
When it comes to the promises of housing ministers, let’s just say we’ve been burned before.
In this job, we’re quite lucky in that we regularly talk to people who are experts in their field, to gain their insights and learn more about all manner of topics. Even if they sometimes say things that can depress you too.
One housing expert I spoke to recently said it’s all well and good that more houses will be built this year than last, but a lot of the ramp up is coming in the form of build-to-rent and social housing.
Unfortunately, it’s roughly only the same number of new houses — in the region of 6,000 or 7,000 — being put in estate agent windows every year.
For late 20-somethings and 30-somethings looking to buy a house, we’re in a crowded market.
And, in this crowded market, prices are only going one way.
The income and savings we have now might have been enough to buy a decent home at the start of 2020. It certainly would’ve been in 2018.
We’re in a race with house price inflation, and inflation is winning.
When applications were opened for 16 discounted homes in South Dublin under the new affordable housing scheme earlier this year, just under 300 submissions were made for the houses at 10-20% below market value. We probably could’ve afforded one of those.
But it’s a drop in the ocean compared to what’s needed. Schemes like this that create genuine affordable homes should be lauded. We just need more of them.
So what are the options?
For many, unless they can get help from family for the deposit, it seems like the only one for now is to keep plugging away with the saving and hope to eventually reach the point where you can afford to buy a home.
As the ESRI tells us, it’s now 50:50.
I’m not holding my breath.
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