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Friday 14 December 2018

We risk ending up with a generation that resents being unable to buy their own homes

Photo: Stock
Photo: Stock
Charlie Weston

Charlie Weston

Could we be on the cusp of a huge change in the pattern of home ownership in this country? There are indications that some younger people have given up on aspirations to own their own home.

This points to a huge socio-economic shift in a country that has always put a high store by owning where we live.

Instead, our State is faced with having a large proportion of "forever renters" who will end up resenting the fact that they cannot afford to buy, and are paying property funds huge rents.

This is the conclusion that jumps out from research in the annual Aviva Family Finance report. It found one in four of those who aspire to own their home believe they will never be able to buy.

They are unable to buy mainly because they cannot get the money together for a deposit. Sharp rises in property prices mean that even getting a 10pc deposit, which is the minimum required under Central Bank rules for a first-time buyer, is proving beyond them.

And these renters are paying so much for a roof over their heads there is little left to save for a down-payment on a home.

Rental costs have gone past €1,000 a month nationally. In Dublin, it costs €1,500 a month for accommodation, up more than €100 from a year ago, according to the State's Residential Tenancy Board. Such is the pressure on young renters that, in addition to the one in four who do not think they will ever be in a position to buy, another 40pc do not expect to be able to buy for another 10 years.

Property prices are rising at a rate of 13pc, according to the most recent Central Statistics Office data. A new MyHome.ie report indicates that the rate of property price inflation is easing, with rises of 7.2pc in the year.

This was the slowest rate of inflation in two years, but it is still a strong rise.

Some nine out of 10 of respondents to the Aviva survey said they would prefer to own their own property rather than renting. The survey was carried out by Red C among a nationally representative sample of 1,292 people.

Not being able to afford to save for a deposit was cited as the main reason home ownership is unattainable for 68pc of the renters who would like to own a home.

People between the ages of 35 and 44 also reported that they are the most financially stressed.

Our inability to provide affordable homes for young people means we are storing up problems for ourselves. People unable to buy are going to be resentful and feel disenfranchised. All of this means we could be at a major inflection point in Irish society.

Sunday Indo Business

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