News Analysis

Sunday 21 September 2014

Liz Kearney: I'm part of the stuck generation – try selling that in a property ad

Published 14/01/2013 | 05:00

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THERE'S not usually a lot to laugh at on Irish telly (not intentionally at any rate), but there is one item of film-making that always gives me a good giggle.

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It's an ad for a well-known property website, which I watched again just as news broke that house prices may fall another 20pc before they hit the floor.

The ad focuses on an attractive, young, red-haired woman, trotting through the front square at Trinity College to her student digs. We see her outgrowing her living arrangements, so she hops on to the website in question and finds a more suitable pad for herself and her significant other – a sleek, modern, apartment-style home full of bleached wood and shiny surfaces.

Then, as a baby bump becomes apparent, our young couple is househunting once more and now, with baby in tow, we see them moving into a beautiful detached home, which looks like the kind of Victorian hunting lodge you might find on a Wicklow estate – all gabled windows and manicured lawns. And they all lived happily ever after.

It's a clever ad: it's nicely shot and produced and is accompanied by an extremely catchy pop song. So why is it so funny?

Because it's so far from reality. The ad's female star looks about the same age as me and my pals – early-to-mid-30s.

We're the generation of homebuyers who bought when the market was at its peak – between 2005 and early 2007 – and, today, our homes are already worth just 50pc of what we paid for them.

We bought in our mid- or late-20s. Encouraged by our parents, enabled by the banks, propelled by fear (if you wait too long, we were warned, you'll never get on the ladder) and yes, stupidly taken in by all of it, thousands of us took the plunge, thinking that we were doing the responsible thing and becoming homeowners.

Now some of us are married or are thinking of starting a family. We look around our apartments or tiny city cottages and wonder just where we're going to put these prospective offspring. In a drawer, perhaps, like in the olden days? Out on the balcony, with the clothes line?

Some of us are still single, but thanks to rising interest rates, pay cuts, tax hikes and the soaring cost of living, are now struggling to meet the repayments alone.

When my husband and I tried to sell our small city terraced home in 2011, our sole offer was for two-thirds of the asking price, which represented about 40pc of the amount paid for it in 2006.

House prices have fallen further since then and, if they fall another 20pc (as ratings agency Fitch predicts they might), our house will be worth less than 20pc of its original value.

That's not a crash. That's a wipeout. So we resign ourselves to never selling these 'starter' homes and, in our more optimistic moments, we think that when we do need more space, we can always resort to renting something more suitable.

But family homes within reach of our workplaces are few and far between and, accordingly, rental prices are very high.

We know we'd have to supplement the rental income on our own properties and, by the time you do the maths, they no longer add up. We know about the very limited 'negative equity' mortgages that some banks are offering, but we can't see how they'd apply to any of us.

And some of us are so scarred by our experience that, even in the unlikely event of the bank offering us another mortgage, psychologically we just couldn't take it.

As a group, we tend not to talk about this topic. But you can feel the fear all the time, bubbling away under the surface. We're stuck right where we are and, with every negative economic prediction, our options narrow again.

In most cases, mortgages were taken out based on two salaries. That leaves hardly any wriggle room if, say, one parent wanted to work part-time or even give up work altogether to stay at home with the kids. We don't allow ourselves to even think about this.

There have been months when we've literally scraped the pennies together to meet our repayments. What if interest rates rise again? We don't allow ourselves to think about this either.

In some ways, our generation has been lucky. We lived through good times and there were jobs aplenty, unlike the generation that came after us. But we paid a huge price for it, too – one that will continue to haunt us into the future.

What that future will look like for my generation is anyone's guess. But I'd bet it won't look anything like that ad. In fact, I'd stake the house on it.

Irish Independent

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