Half of the country ‘unaffordable’ for average buyer

Wicklow and Kildare are least affordable counties to buy property, according to report

A ‘significant barrier’ to home ownership is saving up a deposit, according to the report.  Photograph: Cyril Byrne / The Irish Times

A ‘significant barrier’ to home ownership is saving up a deposit, according to the report. Photograph: Cyril Byrne / The Irish Times

 

Nearly half of all counties in the State are unaffordable for first-time buyers on average incomes, as recent property price hikes continue to push home ownership out of reach for many.

While Limerick and Waterford are the two most affordable cities to buy a home for first-time buyers, Wicklow and Kildare top the charts as the most unaffordable counties. Somewhat surprisingly, Dublin is only the fourth least affordable county in the country.

This is according to a new report on housing affordability from EY-DKM Economic Advisory, which has found that the Dublin and urban-centric housing crisis has now spread across the country.

In considering typical first-time buyer incomes – set at 89 per cent of average earnings – the report has assessed affordability in terms of the salary required to qualify for a mortgage, as well as the ability to save enough for a 10 per cent deposit.

‘Significant barrier’

While Central Bank limits on income multiples have hit the headlines in recent days – with Sherry FitzGerald chairman Mark Fitzgerald arguing for a relaxation on the rules which limit mortgages to three and a half times income – the report says the “significant barrier” to home ownership is saving up the deposit.

It finds that in some counties – Meath, Kildare and Wicklow – it can take more than 15 years for someone on an average income to accumulate enough for a 10 per cent down-payment, due mostly to high house prices and rising rents.

“While incomes nationally have grown, rents have grown much faster, which has resulted in an ever-increasing pressure on first-time buyers’ ability to save,” said Annette Hughes, director with EY-DKM Economic Advisory. In order to ensure greater affordability, the Government needs to achieve a better balance between owner-occupied and build-to-rent developments to deliver affordable rents.

This would “not only increase living standards but free up money to save for a deposit” she said.

The most affordable counties for first-time buyers are Leitrim and Longford, according to the report, requiring two or less years to save enough for a deposit.