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Report

Irish households generally don't spend more income on housing compared to elsewhere in Europe

Research published today by the ESRI, funded by the Department of Housing, explores the housing affordability challenges faced in Ireland.

HOUSEHOLDS IN IRELAND do not generally spend more of their income on housing compared with other parts of Europe, a new study has found.

Research published today by the ESRI, funded by the Department of Housing, explores the housing affordability challenges faced in Ireland. 

They did this by comparing housing-payment-cost-to-income ratios for Irish households with similar households in 14 other European countries. 

On average, Irish households pay one-fifth of net income on housing payment costs, the researchers said. 

Only Norway, Denmark, Portugal, Austria and Sweden show better average housing affordability. 

The report found that Ireland has the fourth highest rate of homeownership for households aged over 40 (just under 80%), but only the 10th highest for households aged under 40 (34%).

This results in one of the biggest gaps in ownership rates between younger and older generations.

More than one-in-four young adults aged 25-34 in Ireland remained living with parents in 2019 and Ireland saw the largest rise in this share between 2015 and 2019.

The report found that, overall, Irish households are less likely to be paying more than 30% of income on housing costs than European peers.

Elsewhere in Europe, 20% of households face housing costs greater than 30% of their income, whereas the equivalent share in Ireland is lower at 15%.

The share of households who pay more than 40% of income on housing costs is similar in Ireland to elsewhere (8%).

The authors found that renters in Ireland face the lowest rent-to-income ratios on average. 

The report said this is because extensive rental supports in Ireland have had a clear impact in sheltering lower income households from more significant affordability pressures. 

However, the report found that middle-to-higher income renters in Ireland are more likely to face higher housing costs than their European counterparts.

14% of renters in the fourth income quintile in Ireland pay more than 30% of income on rent compared with 3% on average elsewhere.

16% of renters in the third income quintile in Ireland pay more than 30% of income on rent compared with 9% on average elsewhere.

More than half of private sector renters not in receipt of housing supports in Ireland fall within these income bands, the report said. 

“While elsewhere in Europe rising affordability pressures have been primarily concentrated amongst the lowest income rental households, in Ireland extensive rental supports have mitigated the effects for these households,” author Rachel Slaymaker said.

“However, in the market price rental sector, affordability pressures remain elevated and middle-to-higher income renters in Ireland face greater affordability pressures than similar households in Europe.”

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