New research published 6 July, 2022 by the Economic and Social Research Institute (ESRI) finds that fewer people will be homeowners by the time they retire. The research – funded by the Pensions Council – estimates that 65% of those currently aged 35-44 are likely to become homeowners by retirement given current trends, compared to 90% of those currently aged 65+.
Lower homeownership rates mean a higher proportion of households in the rental sector and the continuation of rental payments into retirement. The research finds that reductions in homeownership of this magnitude could raise the proportion of older people (aged 65+) living in income poverty on an after-housing cost (AHC) basis, from 14% at present to as high as 31%. The research draws on data from the Survey on Income and Living Conditions (SILC) and the Irish Longitudinal Study on Ageing (TILDA) to develop a number of possible scenarios around the potential level of future homeownership in order to calculate the potential impact on income poverty rates in retirement.
Ireland has experienced a marked drop in homeownership rates in recent years. This has been particularly acute for younger-aged households, with the share of 25-34 year olds living independently who own their own home more than halving between 2004 and 2019, falling from 60% to just 27%.
Dr Rachel Slaymaker, lead author of the report commented: “Homeownership in retirement currently provides a double dividend – lower housing costs and higher assets in retirement. Our findings suggest that homeownership rates will be substantially lower for future cohorts, particularly those currently aged 45 and under. Without intervention this will lead to significantly higher rates of income poverty in retirement for these cohorts.”
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