House swap: moving in the right direction

There’s no place like home, unless it’s a better home. As we move through life, what we regard as “better” changes. The panoramic view from that third-floor apartment soon loses its lustre when you have to lug a buggy up, or start wishing for a garden for your kids.

Equally, what’s the point of rattling round in that four-bedroom family home when the kids don’t even phone, let alone stay. To be fair to them, they’re probably living Canada, so why not move to a smaller place and splash some of the cash you’ll free up to visit them?

To facilitate such moves, good availability of a wide variety of housing stock is required. Therein lies what looks set to be a growing problem.

According to a report by Daft.ie, a property website, among the biggest trends likely to impact the property market in years to come is population growth, particularly in the over-50 demographic, as well as increased urbanisation and falling household sizes.

All of these trends, it concludes, point to the need for greater development of urban apartments. Their availability would greatly facilitate older people looking to trade down. Despite this, the majority of new homes built currently are in housing estates. Just 15 per cent of new homes come in the form of apartments.

In the mortgage market, activity is heavily skewed towards first-time buyers. In June, according to the Banking and Payments Federation Ireland, just under half, at 49 per cent, of mortgages approved were to first-time buyers, while mover purchasers accounted for 29 per cent.

But while the struggles of first-time buyers to get on the property ladder are well documented, those of home owners needing to get further up the ladder are not.

‘No such support’

“First time buyers have all this assistance in terms of the Help To Buy scheme, and they have to have 10 per cent deposits. Those looking to trade up have no such support and they have to save a deposit of 20 per cent. That can be very hard to accumulate when you’re already servicing an existing mortgage. It’s also hard to do at a time when you are more likely to have children to support, at a time when the Bank of Mum and Dad has dried up too. These are the guys I feel sorry for,” says Wayne Sheridan of SmartMortgages.ie.

“The Central Bank rules about 3½ times salary are working in that they are keeping the market from going crazy. The income stress-testing is working well too. It’s just the deposit for those trading up that lets people down.”

There is still too a cohort of people who would like to trade up but who, having bought at the peak of the Celtic tiger market just over a decade ago, are still suffering in negative equity.

The advent of negative equity trade-up mortgage properties, which allows you to bring that deficit with you, has gone a long way towards facilitating such moves. But greater supply of properties – and property types – would help too.

It’s something Sheridan believes could be achieved with a little creative thinking. It might be possible to incentivise widows and widowers living in large family homes to downsize, he suggests. For it to be successful, however, would require more building of apartments and bungalows in the same areas.

Sheridan has first experience of the benefits of taking a creative approach to rightsizing, having helped a family member, a widower, swap his four-bedroom detached home for a swish apartment owned by a young professional couple. “Both parties were delighted and still are,” he says.