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Three more years until demand for new homes is satisfied

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Brian Hayes

Brian Hayes

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Young people are now living in their parents’ home until the age of 28 as the housing crisis continues to impact on families.

The average age has risen from 25 since the end of the boom in 2008 while the average age of a first-time buyer is now 34.

There is little respite from the pressures of the crisis, as a new report warns it will be another three years before housing output comes close to meeting demand.

This is despite the fact that housing activity has recovered strongly so far this year despite public health measures that shut down much of residential building.


But a chronic shortage of houses to buy and the difficulties for young people getting mortgage approval has seen the average age of a first-time buyer rise from 31 in 2008 to 34 last year, the Banking and Payments Federation Ireland (BPFI) said.

And the average age that young people leave the parental home has risen from 25 to 28 currently.


The latest ‘Housing Market Monitor’ shows housing activity has been strong this year, but it could take at least until 2024 before supply comes close to meeting demand.

Chief executive of the BPFI Brian Hayes said the banking body is expecting about 21,000 housing units to be built this year.

That figure is similar to last year.

“Prior to the pandemic, we forecast that annual housing completions would reach 30,000 units by the end of 2022,” he said. “However it is clear that we will not reach this level of output until at least the end of 2024.”

He said housing completions in the first three months of this year were only 7pc lower than in 2019.

Mr Hayes said that while supply is increasing, “the mismatch between current demand, as well as pent-up demand, and the supply of new homes seems to have brought average sale prices relatively close to the peak of the previous cycle in 2007 in terms of sale prices.

“While the gap between current demand and supply had been narrowing before the pandemic, the delayed response in supply is creating latent demand for future years.”

Property prices are back close to 2008 levels. The latest Central Statistics Office data shows households paid a median, or typical, price of €262,500 for a home nationwide in March. The Dublin region had the highest median price at €390,000, the CSO said.

The banking group has warned prices are being driven higher by a lack of supply in the market. Adding to this is the fact that input prices are going up, which the BPFI said could have a knock-on effect on output prices.

Brexit and supply shortages in construction materials due to the pandemic have been blamed for the rising costs of inputs.

Meanwhile, new figures from the Central Bank show that the average new mortgage rate in this country was 2.8pc in April. This is more than double the average of 1.26pc across the eurozone.

Ireland had the second highest mortgage interest rates across the euro area, just below Greece.

This means the average first-time buyer (with a 30-year, €250,000 mortgage) is paying €190 more a month than is being paid in other European countries, according to price comparison site Bonkers.ie

Over a year, the extra amount of money in mortgage payments being paid by new borrowers in this country works out at €2,300.

Lenders here blame tough European regulations on the amount of capital that has to be put aside when mortgages are issued for the high cost of home loans.



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