A report by the Parliamentary Budget Office has found a “collapse” in home ownership rates among adults of prime working age from 25 to 54 in the Republic. This is attributed to rising rents and surging house prices. It determined that current house prices were six to seven times average salaries, making housing “severely unaffordable” for many workers.
It is evident that after the 2008 financial crisis, earnings declined and became stagnant for several years and have not kept pace with house prices or rents. As a result, home ownership dropped by 10 pc points to 67.6 pc between 2007 and 2016, while the number of households renting rose from 21 pc to 28 pc.
The report illustrates that from 2012 to 2020, average wages grew by 23%, while house prices grew by 77%. The deduction therefore is that, for some, this is clearly making house ownership “unachievable”, and that high prices relative to incomes are “pushing potential buyers out of the market and into rental accommodation, social housing or emigration.”
Dublin showed the biggest affordability gap. From 2010 to 2020, Dublin properties were on average 1.55 times more expensive than house prices across the state. These high prices have tended to push buyers out of the city and into commuter counties, which is reflected in the 13.2 pc growth in prices outside Dublin during 2021 to September.
It is clear that housing affordability has also deteriorated for renters, with rents now 40 pc higher than pre-crisis levels in Dublin, where rents have doubled in the past decade, and are 20 pc higher in the rest of the state.
LSL News.