Cliff Taylor: The slow squeeze which has locked younger people out of the Irish housing market

It is all too easy to get caught up in the short-term news in the housing market – the just-published house price figures, the European Central Bank’s most recent move, the latest row between Darragh O’Brien and Eoin Ó Broin, or whatever.

All this is legitimate – and sometimes important. But often it is the longer-term trends that tell the story. And the latest census figures from the Central Statistics Office (CSO) show the widening gap in the housing market between the settled, older population and the younger generation, many of them locked out of ownership and struggling in the rental market. Or just stuck at home with their parents.

This is not a new story. But the extent of the changes over the past decade or more, shown by the census, are really striking. Here is one comparison. In 2011, there were just over 200,000 people in the 30-to-39 age group who owned a home with a mortgage. By 2022, the total had fallen to around 116,000. While the size of this cohort of the population fell between 2011 and 2022 – by about 40,00 – this drop in home ownership in a growing economy is really significant.

Looking at rental trends, while the proportion of over-30s renting is rising, the figures suggest that many are locked out of this market too and so must be living in the family home. So are many in their 20s, where rental numbers are actually falling. The slow squeeze that has taken younger people out of the housing market has taken years to build, but we are now seeing the social and economic consequences.

The economic war between the US and China will cause problems for Ireland

---

The budget is still six months away - but the Coalition is showing signs of losing the plot

---

Interest rates may be coming down. That’s not entirely good news in a frothy property market

---

Battle lines are being drawn in the escalating row over the cost of Irish reunification

---

In 1991, two thirds of households owned their own home at the age of 28. Family formation these days would normally push into the 30s. But the age at which two thirds own their home has now risen to 44

The CSO highlights one trend, which it calls the “change over”, the average age at which people move from renting to homeowning. This has risen from 26 in 1991 to 36 now. Most of the increase has come since 2006, so we might speculate that the first big hit was the financial crash and its aftermath, and then the more recent affordability problems as prices rose, exacerbated by the difficulty of saving for those in rental accommodation.

There are social trends at play here too, including the later age at which people form permanent partnerships. But again, the longer term tells the story. In 1991, two thirds of households owned their own home at the age of 28. Family formation these days would normally push into the 30s. But the age at which two thirds own their home has now risen to 44. And that points to a lot of frustrated would-be buyers, stuck in expensive rentals or living with parents.

Economist Seamus Coffey sliced the data in a slightly different way. He calculated that in 2011, 22 per cent of households had a “reference person” (a single person or one partner who filled in the form) under 35, but by 2022 this had fallen to 14 per cent. Adjusting for the falling population among this group, he calculated that the 2022 level was 70,000 households short of 2011. Further evidence of the young being squeezed out.

Younger people are caught twice, first in a delayed move out of home – whether into student accommodation or ordinary private rental. Rents are up 37 per cent on average since 2016. And then the combination of high rents and high house prices is delaying, or putting off entirely, their aspiration to buy.

Unanswered questions

Across all age groups the percentage of people owning a home with or without a mortgage has fallen from 70 per cent in 2011 to 66 per cent now. Meanwhile, as the population ages and people live longer, the group owning outright with their mortgage paid off is rising strongly, and now accounts for almost four out of 10 households. The generational divide could hardly be clearer.

All parties now agree on the need to spend more State cash to support a lot more building, even if they disagree on how this should be done. But there are still some unanswered policy questions.

[ Census 2022: 83% increase in number of over 65s living in rental accommodation ]

Do we see rental as a long-term solution for more people? If so, this has implications for policy that go well beyond the rules governing the rental market and into areas such as pensions and supports for older people. Home ownership is still the preferred goal across the political spectrum, but if the short-term solution for the lower middle income earners who can’t afford to buy but don’t qualify for local authority housing is the cost-rental model – where rent is lower than the market rate – then some thought is needed here. And quickly, because the census is already showing a rise of older people in the private rental market.

A second half-answered policy question is about where people live. The census figures show that the biggest increase since the previous census has been in the Dublin commuter counties of Meath and Kildare, both up by 11 per cent. Many will commute into the city centre, though post-Covid working from home will reduce this a bit. Meanwhile, this week, the Climate Change Advisory Council said that the Government needs to increase the target for the number of people living close to city centres on so-called brownfield sites, in other words redeveloped from a previous use.

The most striking thing about the census figures is the length of time this housing crisis has been brewing. Fixing it will also be a long-term job, despite the spins of both Government and Opposition

Living in these “denser” settings with public transport links cuts car journeys and thus transport emissions. Yet our redevelopment of State land for this use seems painfully slow and blocked in some cases by State bodies, who want to hold on to their turf. Years of planning delays may lie ahead.

[ Housing completions up 5.4% in first half despite slowdown ]

Meanwhile, it seems that it will take until 2035 to get a commuter train service operating to Navan, to help get people living there to commute. There is a complete lack of joined-up policy thinking here and lack of the kind of societal debate needed about new environmentally friendly ways of living.

But the most striking thing about the census figures is the length of time this housing crisis has been brewing. Fixing it will also be a long-term job, despite the spins of both Government and Opposition. A Hemingway character, asked how he went bankrupt, said it happened “gradually, and then suddenly”.

The last few years have seen the festering housing problems turn into a crisis. The political problem is that there is no quick way out. The challenge is to get voters to trust a particular policy programme. This is a central battleground for the next general election.