15 Years Of Saving For A Mortgage Deposit Now The Norm!
The usurious rental market is taking it's toll on young Irish renters who are unable to save for a mortgage deposit. Mass immigration has made both renting and buying completely unaffordable for hardworking Irish families.
Would-be homeowners living in Irish cities can spend over 15 years trying to claw a deposit together, a new report addressing the affordability of housing supply has said.
Taking rent and other household expenditure into account, it says, the average time required to save a down payment ranges from 1.7 years in Kilkenny to more than 15 in Galway City, Wicklow, Waterford City, Cork City and Dublin City.
However, the analysis - Putting Affordability at the Heart of the Housing System – envisages a system in which paying rent could be turned to a house buyer’s advantage.
“A key issue is high rents in the private sector, which make it difficult to save for a deposit,” it says.
“Having demonstrated the capacity and commitment to making regular rental payments, consideration should be given to taking the rental history of applicants into account in the mortgage application process.”
The report, published by the Irish Home Builders Association (IHBA), which produces about 85 per cent of annual output, is calling for a range of issues that might address the problems in supply and affordability.
Among them are a State backed shared equity scheme for affordable units; an extension of the Help to Buy scheme; and the conversion and restoration of vacant properties through a retrofitting incentive. It also suggests various measures to reduce the cost of construction, reassess densities and streamline the planning system.
When it comes to affordability, it says working couples living in 21 of 34 city and county council areas have sufficient income to purchase a home at the local median price. The main affordability crisis is in the city council areas, where incomes are insufficient.
It also says that housebuilding levels remain substantially below what is needed. Initial projections for output in 2020 show it falling to about 17,000 units due to the effects of the Covid-19 pandemic.
“This is despite recent estimates from the Central Bank of Ireland and the ESRI (Economic and Social Research Institute) stating that an average of 35,000 new dwellings will be required per annum until 2030 to keep pace with the projected population growth.”
The report estimates the cost of building a home, before the pandemic, at between €330,300 for a two-bed townhouse in Dublin, to €371,311 for a three bed-semi-detached house in the Greater Dublin Area, and €463,100 for a two-bed apartment in Dublin.
Perhaps unsurprisingly for the sector, it puts some emphasis on the cost of government policy to the delivery of stock.
“The quality of new homes is much higher than in the past, reflecting new regulations and higher building standards, all of which have a cost,” it says.
“Estimates suggest that policy imposed costs account for around 20 per cent of the total delivery cost of a new home, and have been a factor in rising construction costs in recent years.”
Typical construction costs, it says, account for up to 55 per cent.