Having children now comes before buying a home
Average age of first-time buyers rises from 29 to 33 as Generation Rent face financial hurdles
Published 24/08/2015 | 02:30
Having a baby must come before owning a home for a new generation that has little choice but to rent until their mid-thirties.
Increased barriers to acquiring a home have raised the average age of Ireland's first-time buyer by four years to 33, the Irish Independent can reveal.
The sea change indicates that for the first time in generations, more Irish couples are now starting their families in rental accommodation- a social shift which goes against the longstanding Irish tradition of buying your home first.
In 2005, the average first-time buyer in Ireland was about 29, but according to Real Estate Alliance (REA), this figure is up and still rising.
The increasing price of property is a key barrier to ownership. REA members believe the age of the first-time buyer in Dublin, where property is most expensive, is even higher again at 35.
A combination of circumstances have combined to make it extremely difficult for young people to buy:
- New Central Bank rules pushing up the deposit that must be saved for a house;
- Returning emigrants finding it difficult to secure mortgage approval without a full year's employment behind them;
- The increase in contract work, as opposed to a "job for life", making it difficult to get a mortgage;
- A change in attitudes following the property crash and unwillingness to buy the "wrong" home.
The first-time buyer age of 33 was calculated by the REA, an estate agency group of 55-plus estate agency firms nationwide.
This is up from the age of 29, which was provided by the ESRI near the height of the property boom in 2005.
Meanwhile, HSE statistics show that the average age of an Irish woman having a first child now stands at 32.1 years.And the REA predicts that the age of first-home ownership will rise sharply again over the next few years.
Over the past two years, average property values have increased at a faster pace than average wage levels, therefore the whole area of affordability has become a factor.
"The introduction of the Central Bank's mortgage deposit requirements, combined with higher rents, has made it increasingly difficult for young people to save up their deposits, especially in Dublin," said the organisation's CEO Philip Farrell.
Financial impediments placed in front of Ireland's returning emigrants have also produced a storm of conditions.
"Through economic or other reasons, our young people left the country in their droves over the past decade and this has also created a lost generation in housing-purchase terms," said Mr Farrell.
"While many young people are now returning from abroad with the growth in the economy, they are finding it difficult to secure mortgage approval without a full year's employment behind them, which is pushing the average age up all the time."
The REA says that first-time buyers are only likely to be younger in rural towns, where there is a large employer present, such as a multinational, and more affordable properties.
Mr Farrell added: "We are also finding that young people's attitude towards property buying in their 20s is changing as a result of the global crash.
"Due to the uncertainty surrounding property values during the recession, many young people chose to 'park the bus' in relation to purchasing their own home and confidence in property as an investment was diminished.
"As a result of both of these factors, we have seen many potential first-time buyers choosing to either remain in the family home or rent for longer periods, rather than following the race to get on the property ladder.
"This has had a knock-on effect, with the age of the average age of the second-time buyer now standing at 39 and also increasing.
"One issue for consideration is the low prevailing interest rates, which will not remain so forever and ultimately will also affect the affordability issue."
Another issue for young purchasers is getting adequate access to finance. The new income requirements of 3.5 times salary, combined with increased deposits introduced by the Central Bank this year, will continue to exert pressure.
Agents are also reporting that young people are also being forced to reapply for finance due to mortgage offers expiring as a result of sales falling through when they are part of a selling chain.
Mr Farrell added: "Up to recently, a large percentage of banks and receivers sales were falling through due to issues such as title, which meant that young people were having to return to the issuing bank for reapproval. This may not be related to the property in question, but often to the next house in the chain and this has been a source of heartbreak for many potential buyers."