One-in-four workers is priced out of buying home

ONE-IN-FOUR taxpayers is now priced out of buying a home amid rapidly rising prices in areas of huge demand.

The cost of buying a new or second-hand property has reached such heights that most homes sold in areas of high demand are well out of reach for those earning the average wage.

Analysis of Revenue Commissioners figures show that in 2015, there were 2.3 million ‘units’ paying income tax. These ‘units’ can include single people or couples. But of the total 2.3 million, one-in-four earns between €40,000 and €90,000.

This cohort earns too much to qualify for social housing, but would struggle to buy a home in areas of high demand. It means they are forced to continue renting, which leaves them open to rising prices, limiting their ability to save the necessary deposit to purchase a property.

Last week, the Government admitted that affordable family homes cannot be delivered for couples earning a combined income of almost €92,000 a year.

Delivery of houses and apartments at prices between €240,000 and €320,000 is not viable in many areas of high demand, the Department of Housing says. Reasons cited include land hoarding, a refusal by bailed-out banks to lend for housing and a shortage of construction skills.

The Government defines an affordable home as one costing between €240,000 and €320,000. This is based on ‘average’ earnings of €45,611 a year. The most recent figures from the Central Statistics Office (CSO) show the median price paid for a property in February this year was €235,000.

However, the property price data highlights that in 50 of the 139 areas surveyed by the CSO, the median price paid is above €240,000, the lower limit of affordability.

Homes below this price point are only available in Galway, Waterford, the northside of Cork, and Dublin 17. Homes costing between €240,000 and €320,000 are available in just 23 of the 139 areas.

The figures also show the average price paid by a first-time buyer for a home is €249,000 – which is already above the affordability threshold for many.

The Government is hoping its Rebuilding Ireland programme will boost output of new homes to provide properties to firsttime buyers, and those hoping to trade down to a smaller property. But the CSO figures highlight that the average price paid by a first-time buyer for a new property is €321,415.

Pressure

The figures come amid mounting pressure on the Government to ramp-up delivery of housing output.

The clamour to purchase a home has seen would-be buyers queuing in anticipation of snapping up a property in some new developments. These included Glenheron in Greystones, Co Wicklow, where Cairn Homes last night confirmed it had sold 48 new homes for a total of €25m in one day.

Michael Stanley, CEO of Cairn Homes, said: “We sold 48 new homes on Saturday morning which is an extraordinary outcome... this is the clearest demonstration I have seen of the strength of the market for well-built homes.”

Half the customers were first-time buyers, the rest were families trading up.