The dysfunctional Irish property market has created a string of unintended consequences, including a surge in homelessness with tragic consequences, tens of thousands being stuck in box rooms and sharply higher costs for first-time buyers and renters. Figures released this week cast new light on another consequence – the one-and-done phenomenon.
This is where lack of supply and high prices on the second-hand market combine to leave people in their first home, unable to move up the ladder to larger properties. These people are improving and, in many instances, expanding their existing property. The starter home thus becomes the finisher.
It is a logical decision for the families involved, faced with the Hunger Games of the second-hand housing market where every new property immediately faces a queue of buyers.
Often, the only option available is to buy a bigger “doer-upper”, a rundown older property facing a bill of at least €100,000 and often twice that to put in order.
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Many families are instead staying put and turning their three-bedroom home into a four-bed, trying to improve their comfort with a better Ber rating and installing a new kitchen or a Dermot Bannon-style family “space”.
But it also means there are fewer smaller second-hand homes suitable for first-time buyers coming on the market. These smaller homes can also be attractive for those wishing to trade down. The ladder is broken in both directions.
The figures were spelt out in the latest report from Banking and Payments Federation Ireland (BFPI). this week, which crunched some data from the Central Statistics Office (CSO). This showed a big rise in investment in home improvements in recent years, increasing from €3.9 billion in 2019 to more than €7.5 billion in 2024 and likely to have reached €8 billion in 2025. Home-improvement spending is more than holding its own as a proportion of total housing investment, even as the State spends billions of euro incentivising new homes.
The number of existing properties sold is falling – dropping to just over 38,500 last year, the lowest level since 2020. The BPFI figures show that mortgage drawdowns for people buying second-hand homes are also on the decline, with the mortgage market dominated by first-time buyers.
Find a suburban three-bed semi-d for sale or a terraced property nearer Dublin city centre and you will also find a queue of buyers and a bidding war. Mortgage approvals are being rolled multiple times as frustrated buyers try to find somewhere acceptable within budget.
Increasingly, the younger families generally involved are making do with what they have and planning a big refurbishment or extension. BPFI figures show a pickup in top-up mortgages to do this, but the scale of these loans is still limited enough. Many are also funding it through term loans from banks or credit union, according to mortgage broker Michael Dowling, which cost a bit more but involve less paperwork and more flexibility. Others are paying for it through savings. State grants for energy upgrades can also help.
Hefty sums of €100,000-plus are also involved, Dowling said, with homeowners hoping to benefit in the longer term from space and lower energy bills, even if an Economic & Social Research Institute (ESRI) study this week showed that a higher Ber rating does not always knock on to heating bills falling as much as expected.
The rise in house prices is also central to the financing equation for many. Many homeowners now have significant equity built up in their first property, according to Martina Hennessy of doddl.ie, and are choosing to release this to fund home improvements. Average house prices are up around 50 per cent over the past five years.
Half of the switcher-loan applications doodl.ie receives are for people planning to invest in their existing property or consolidate existing debt from home improvement. More and more starter homes, she points out, are thus becoming forever homes.
With younger couples choosing to invest and older people seeing limited options to trade down, there is a vicious circle in the second-hand market. The most serious downstream consequence is the ongoing lack of supply for first-time buyers. In city centres, new-home building is limited due to a lack of space and high property costs. A recent survey by researchers with a new website, onemillionhomes.ie, showed no new homes were built in 21 Dublin postcodes last year, nor in 57 other postcodes in the State.
The lack of new homes available to buy close to city centres reflects the failure to deliver the promise of “compact” city dwelling. Central to national spatial planning, this is the development of apartments, duplexes and smaller homes located close to city centres.
Other than a rise in apartments to rent – often at hefty prices – this is not happening on any scale. Just like harnessing offshore wind and the extension of the Dart, it is one of the things that sits in endless official documents, but never actually appears to happen.
And so, first-time buyers in Dublin are increasingly faced with a choice. Go the doer-upper route close to where they live, or at least not far from the city centre, or buy a new home in Dublin’s outer suburbs or one of the commuter counties. In counties such as Meath and Kildare, population numbers are being increased by the influx of Dubs, many of whom undertake long and tedious commutes.
With trading up so difficult, many may find their move to the commuter counties is a permanent one. Ireland’s demographics are being remade with this extreme version of urban sprawl. Meanwhile, those who bought closer to the city centre are holding on to what they have and seeking to improve it, rather than trying to go up the ladder by buying a bigger property. Many will be happy but for others it is a less-than-ideal outcome that has become a feature of the Irish housing market.
Building resources, where huge expansion is needed, are diverted to doing up old homes rather than building new ones. For smaller builders in particular, this can be a more attractive and less risky route. But increasing the capacity of the construction sector and addressing the trade-offs of where it should be directed are key political questions.
For now, refurbs are in fashion. In suburban Ireland, white vans are everywhere and kitchen showrooms are jammed. Millennials lean across the garden fence and discuss the price of heat pumps and solar panels. More and more are deciding to “trade up” by staying exactly where they are.
