Buying Home first-time buyers

Published on June 10th, 2016 | by Martin Clancy

Average age of first-time buyer rises to 34

The average age of the first-time buyer in Ireland has risen by five years to 34 over the past decade, with a leading estate agency group predicting that home ownership may soon be a pipedream for those in their twenties.

In 2006 the average first-time buyer in Ireland was approximately 29 years old, but, according REA, this figure has increased by 17% and is still rising due to a combination of circumstances.

The Alliance’s index of first-time buyers reports that the age profile has risen from average of 33 in the past 12 months, with a combination of factors are barring the entry of young people into the housing market.

Real Estate Alliance (REA) agents around Ireland are reporting that first-time buyers in their twenties and early thirties are now mainly absent from the market for properties priced over €160,000.

“A definite two-tier system has emerged over the past year nationwide, with €160,000 emerging as the breaking point for interest from buyers in that age group – ruling out most properties in Dublin,” said REA Chairman Michael O’Connor.

Another huge factor in the first-time buyer market has been the recent strength of buyers from outside Ireland who have been typically living and working here for over a decade now putting down roots and buying houses.

“In areas such as Carlow, REA agents are reporting that 30% of first-time buyers are now from Eastern Europe, a percentage that has grown rapidly over the past two years,” said Mr O’Connor.

“The biggest factor influencing the market this year has been the Central Bank deposit rules which have created a two-tier system, ruling out home ownership for many young people due to over-restrictive guidelines,” said REA Chairman Michael O’Connor.

“The introduction of the Central Bank’s requirements, combined with higher rents, has made it increasingly difficult for young people to save deposits, especially in Dublin.

“House ownership is now off the table for many couples earning average salaries, with their only hope of purchase now coming from an injection of outside help, usually from close relatives.

“From a Dublin price perspective, the rules don’t make sense, with the combination of the deposit rates and the multiplier falling far short of our average three-bed semi price in Dublin city and county of €334,000.

“A couple on a combined average industrial wage income of €74,000 can borrow 3.5 times their income, making a total of €259,000.

“Many of them will struggle to raise a deposit of €35,000, but if they do, it gives gives them a maximum buying power of €294,000.

“Those figures, and the level of savings required, go a long way to explaining why the average age of our first-time buyer is being pushed upwards.

“Many potential purchasers are in rented accommodation and are having difficulty in paying high rents and saving for a deposit for houses that they would otherwise comfortably afford.

“While we welcomed the introduction of guidelines from the Central Bank, we feel that they are not reflecting the reality of the market.

“For example, the mortgage multiplier is 4.5 times income in the UK and this is something that we need to revisit under current rules.

“We also need the Central bank to acknowledge that the market for first-time buyers is being stalled by second-time buyers being unable to move out of their starter homes due to the restrictions of the Central Bank rules.

“They need the same 10% deposit derogation as first-time buyers and the notional €220,000 limit needs to be raised to reflect the reality in the area of most need – Dublin.”

Interestingly, the age may be lowering the further out the commuter belt you go as REA Coonans in Maynooth are reporting that their average first-time buyer is in their early thirties.

REA agents nationwide are noting the rise in buyers from outside Ireland who have been typically living and working here for over a decade now putting down roots and buying houses.

“In some Dublin areas, non-national purchasers are forming a large part of the first-time market, providing stimulus at a time when there is little movement in that sector,” said Anthony McGee of REA McGee, who are based in Tallaght.

“Although it is cheaper to buy than rent, large numbers of people are stuck in long-term high-cost renting which is effectively ruling them out of ever saving a deposit under the current rules.”

The availability of mortgage finance is cited as an issue country-wide with Healy Hynes of REA Hynes in Athlone reporting that the vast majority of loan approvals are for under €100,000.

Read out top tips on Buying your first home.

 


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