Opinion

Saturday 24 August 2019

Frank Coughlan: 'Bank of Mum and Dad isn't always the answer on housing'

Expecting parents to fill that chasm between expectation and reality is little short of moral coercion. Stock
Expecting parents to fill that chasm between expectation and reality is little short of moral coercion. Stock
Frank Coughlan

Frank Coughlan

There's an old joke about the Irish mammy telling her waster of a son how she'll be fine sitting in the dark on her own while he heads out pinting with the lads.

Parents, we automatically acknowledged, sacrificed everything for us. They worked themselves to the bone, saved the pennies in the jam jar and simply went without.

Far from poor, perhaps, but with little left over at the end of the week either. Like all the best clichés, there is more than a grain of truth in it.

Parents certainly gave you everything that was in their gift, but it was mostly love, care and devotion.

Money, on the other hand, was something you had been educated well enough to earn for yourself. Off you went.

But even that recent past is a different country, and the one we reside in now abides by different codes and rules.

You're no longer all grown up at 21, it seems, and arrested development extends to a financial puberty that can linger well into the thirties.

A report published in Britain this week predicted that parents will hand over €7bn in loans to their children this year, mostly so they can get on the property ladder.

It makes the Royal Bank of Mum and Dad the 10th biggest mortgage lender in the country.

On average they are parting with €27,000 to give their youngsters a start, according to the study by Legal and General and the Centre for Economics and Business Research.

There is no such creative guessonomics for Ireland, but a Red C poll published in April predicted that 51pc of first-time buyers in Ireland will need to have their palms crossed by their parents.

We all know the reasons why and no need to rehash the rehashed here. Too little supply and too much demand is the simple equation by which the market best does its greedy business.

This leaves Ireland with a generation which expected to inherit the earth but instead found it couldn't even afford a deposit on a very modest patch of it.

Bad luck for Fionn and Gráinne who happen to be collateral damage as macroeconomic and technological somersaults flip the world on its head.

But life was never fair and expecting parents, recent empty-nesters about to put their feet up for the first time since Wham! reached number one, to fill that chasm between expectation and reality is little short of moral coercion.

Among Europeans we have a fetish for home ownership. Even 50 years ago, more than 70pc of Irish householders were buying or owned their own home compared to 50pc in the UK and as low as 35pc in sensible Sweden.

My generation helped that statistic accelerate, reaching its peak in 1990. Not that it was easy back then either. Interest rates were tipping 16pc in 1982. They average a wimpy 3pc now.

Social historians and sociologists can argue over why we're such suckers for bricks and mortar, but it is one of the principle reasons why the friendly Bank of Mum and Dad has a queue out the door.

This financial institution, after all, doesn't send nasty letters, foreclose or haul you before a frowning judge. It will probably make you a nice cup of tea instead.

But beyond the convenience is the expectation, never formally verbalised, that baby boomers should somehow feel obligated to help smooth the path to a house and garden in the suburbs that economic reality suggests millennials can't afford.

Good luck to those parents who can effortlessly do that, or simply feel they should. But for many others it bears the whiff of soft, insidious blackmail.

This might read like a callous takedown of a generation born into a world of challenges and uncertainties that ours never had to deal with.

But it's a world of fresh opportunities too. Owning a house might not always be one of them.

Irish Independent

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