A new report issued by EY-DKM Economic Advisory, confirms that nearly half of all counties (46%) in the Republic of Ireland are now unaffordable for first-time buyers on an average income, with Waterford ranking number 8 on the list for affordability. The report titled “Just how affordable is housing for Ireland’s first time buyers?” provides an analysis of Ireland’s housing market using a unique modelling tool and highlights the worrying trend that the lack of affordable houses for first time buyers has moved beyond urban centres such as Dublin and Cork, and has now become an issue in many less urban areas nationwide.
The report assesses affordability using two factors; whether first-time buyers can afford the mortgage repayments on a property based on a mortgage of 3.5 times their household income, and second, their ability to accumulate a sufficient deposit of 10% to purchase the property. The findings reveal that a significant barrier to home ownership for first-time buyers’ is their ability to save the required 10% deposit due to a range of factors, which, in some counties, can take over 15 years to accumulate on an average income.
In Waterford, the report finds that it takes first-time buyers on an average income 1.6 years to save for a deposit. The Dublin commuter counties of Wicklow, Meath and Kildare top the results as the most unaffordable when it comes to saving for a deposit, with an average of 15+ years required to save 10%. Roscommon follows closely behind at 10.4 years while, in contrast, first-time buyers in Dublin are required to save for 4.3 years. Leitrim is the most affordable county, with a little over one year required to achieve a 10% deposit. These figures may appear counter-intuitive, but they reflect differences in property prices and household incomes across the country. Between 2015 and 2018 property prices in Waterford grew by 10.4%. The strongest price growth in the period was seen in Laois at 14.1% while Sligo experienced the weakest growth at 3.9%.
Other findings from the report show:
The top five affordable counties in Ireland for first-time buyers saving for a deposit are; Leitrim (1.3 years), Waterford (1.6 years), Sligo (1.6 years), Cavan (1.7 years) and Longford (1.9 years).
The five least affordable counties in Ireland for first-time buyers saving for a deposit are: Meath (15+ years), Wicklow (15+ years), Kildare (15+ years), Roscommon (10.4 years) and Galway (8.3 years).
The number of houses in rented accommodation in Dublin in 1991 was 8%, in 2016 that figure rose to 20%.
There is no evidence to suggest that first-time buyers are moving to areas where houses are seen as more affordable, as the more affordable counties do not appear to be growing faster, on average, than the less affordable counties, in terms of the growth in the number of property transactions.
EY’s latest forecast projects GDP growth of 4.1% in 2019, with moderated growth to 2023 and beyond. This forecast will increase employment levels with a projected further 210,000 jobs coming on stream in the next five years. Foreign workers will be drawn in to meet this need, but this in turn will put further strain on the property market.