123.ie Irish House & Home Survey reveals that one in five people might never afford their own home

Summary

61% of homeowners are staying put

73% of people want water charges scrapped

3 in 4 of over 55s who could downsize don’t plan to

 

Affordability is a huge issue for those not currently on the property ladder with almost one in five (19%) reporting that that they don’t think they’ll ever be in a position to buy their own home, despite the fact that 91% of adults currently renting or living at home say that they want to buy.

The majority would like to purchase a house (77%), just 6% would like an apartment and 17% would be happy with either. However, for most, buying will not be a realistic prospect until at least 2019 and one in three respondents say that it could take up to five years before they are in a position to buy. The majority of those planning to buy in 3-5 years are aged 25-35 years (64%) and 31% are in the 18-24 years age bracket.

The 123.ie Irish House & Home Survey was carried out amongst landlords, homeowners and renters / those living at home and covered a range of issues including rental properties, mortgages, renovations and water charges.

“Affordability is a massive issue for younger people,” said Padraig O’Neill, (Head of Marketing)” Almost one in five of those renting or living at home feel they’ll never be able to buy and some say it’s because property prices are too high, but the issue is more complex than that and there are multiple factors at play that make ownership for some seem like a remote prospect.”

According to the research, these factors, or barriers include the ability to service the mortgage (34%) whilst 18% cannot save enough money for a deposit; 20% think that the new salary to mortgage ratio is too restrictive.

Notwithstanding these results, the property market should experience plenty of interest in the short-term, as 25% of respondents currently renting or living at home are planning to buy in the next two years. Of these, 74% are aged 25-34 and 12% are in the 18-24 year age bracket. Over half (58%) of those planning to buy are currently living in Dublin or neighbouring counties.

The short-term outlook for those who would like to buy is gloomy, with 71% of the opinion that property prices will continue to rise.

RENT INCREASES FOR ALMOST 40% OF TENANTS

39% of people in rented accommodation have had a rent increase in the past 12 months. Rent went up by more than 20% for 16% of respondents. That would equate to a minimum rise of €3,600 per annum on a typical monthly rent of €1,500.

 

14% of those in rented accommodation have missed a rental payment in the past 12 months and whilst 14% say they simply forgot to pay, the overwhelming majority (61%) reported not having the funds to pay their rent. It is estimated that there are more than 300,000 households in private rented accommodation 1 .

“Landlords are often the subject of negative publicity, which in some instances may well be justified, but the research actually shows that 83% of those in rented accommodation are happy with their property,” said Padraig O’Neill. “Over three quarters of landlords are responsive when it comes to maintenance issues and more than 60% of renters have not had their rent increased in the past twelve months, which might come as a surprise, given the shortage of rental accommodation in the market at present.”

LANDLORDS ARE HIGHLY IN DEBT

A 2014 survey shows that many landlords became ‘accidental landlords’ as a result of both living abroad and renting out their primary residence, or by renting another property that better meets their needs 2 .

Two thirds of rental property has been rented out in the past ten years. “We would have expected this trend,” said Padraig O’Neill, “coinciding as it does with the boom years when there was a lot of activity in the housing market with many people hoping to secure sound investments.”

The majority of landlords bought property for rental or pension income. Just 10% reported buying for speculative reasons. “Most landlords weren’t into purchasing multiple properties and playing the speculation game,” said Padraig. “Of course there were many big players, but these are not representative of the average landlord, 43% of whom now hope to sell, according to our research.”

A significant proportion of landlords plan to sell, 11% plan to do so in the next two years whilst almost one third is waiting for the price of their property(s) to improve before putting it on the market. On the other hand, almost half of landlords are holding onto their portfolio. Just 5% are planning to add to their property portfolios over the next five years.

 

Almost two thirds of landlords have mortgages on their property suggesting that one third either inherited, bought for cash or have managed to pay off their mortgages. Those with mortgages are highly geared with one in four owing 100% or more of the current value of the property and 30% between 70 – 100%. Only 22% have less than a 50% gearing according to the 123.ie Irish Home Survey.

Padraig O’Neill said, “Many landlords bought for investment or pension purposes and they were hit hard by the economic downturn. They are now stuck in negative equity and their loan-to-value ratio means that they are badly caught up in debt. There is no quick fix solution. They either ride out the storm and hope that property prices will rise, allowing them to pay off their mortgage, or play the long-game and hold on to the rental property. We’re surprised with the responses from landlords, which shows that there is a lack of interest in buying more rental property given the high rent / value in the market at present.

HOME RENOVATIONS

Over two-thirds of home owners plan on staying in their current home in the long term (20+ years.) Rather than looking to move house, more than a quarter of home owners (27%) plan to upgrade or extend, which could spell good news for building contractors and builders providers. The average spend is €23,000 with the kitchen being the most popular room in the house for an upgrade (42%). Extending living areas is more of a priority than adding bedrooms, as the average household size falls. 11% of home owners planning on renovating are looking to add an extra bathroom to the house .

“When it comes to our own homes, as a nation we like to stay put,” said Padraig. “Overall, around 61% of survey respondents see themselves living in their current residence for the rest of their lives. For some, the reason might be related to being in negative equity but for most, it would seem, they are happy with their home and surrounding area

Downsizing is not a consideration for most over 55's with large homes. Even though almost half (47%) of over 55’s have two or more unused bedrooms, over three in four say they plan to stay in their home for the rest of their life.”

73% WANT WATER CHARGES SCRAPPED

When asked about water charges, 73% of the population responded that they should be scrapped with the greatest support for abolishing the unpopular measure in Dublin, amongst younger people and those in local authority housing.

“Many of the survey results surprised us. Whilst we felt that water charges would generate a strong response, we hadn’t anticipated that the majority of renters hadn’t experienced a rent increase in the last 12 months. Equally, while downsizing when older seems like a logical move it seems that older owners with excess space are resistant to it.” said Padraig.

The 123.ie Irish House & Home Survey was carried out online in April 2016 amongst almost 3,800 adults in Ireland.

1. Census, 2011 - CSO

2. Private Rented Sector Survey Findings, 2014 - Tenants, Landlords and Estate Agents, DKMDKM, RedC, ESRI