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Dublin: 4°C Monday 19 April 2021

First-time buyer couples are spending over a quarter of their wages on mortgages

“First time buyers are facing more expensive mortgages and inflated pricing due to the chronic shortage of houses in Ireland.”

Image: Shutterstock/Pop Paul-Catalin

COUPLES WHO HAVE recently bought their first homes are spending 27.4% of their net income to service their mortgage.

The July EBS-DKM Affordability Index shows affordability falling as house prices rise.

It shows that in last may, that the first-time buyer figure was 25.5%.

For single people who bought their first home, they are spending 32.2% on their mortgage repayments.

The proportion of net income needed by the average working first-time buying couple to fund a mortgage in Dublin was 27.4% in May 2017. This compares with 25.5% in May 2016 and a low of around 17% in 2012.

The proportion is expected to continue rising and is projected to reach 29.2% by December 2017. House prices are now rising quickly outside Dublin, implying affordability is also deteriorating outside Dublin, particularly in the commuter belt.

Dublin, Wicklow, Kildare, Galway City and Meath were the least affordable locations, with buyers needing 20%-26% of disposable income to fund a mortgage in those locations. Meanwhile Longford, Offaly and Leitrim were the most affordable counties. Less than 11% of a couple’s disposable income is required to fund a mortgage in these counties.

Within Dublin, Dun Laoghaire-Rathdown is the least affordable area, as working couples are paying 35.8% of their net income in monthly mortgage repayments. A single buyer buying in the same area would pay over half (53.5%) of their net income in repayments.

The average national first-time property cost for May 2017 was €245,662 with the average first mortgage at €196,530.

Ciara Morley, Economic Consultant with DKM Economic Consultants said:

“First time buyers are facing more expensive mortgages and inflated pricing due to the chronic shortage of houses in Ireland. We are seeing an upward trend in the proportion of disposable income required to fund a mortgage for first-time buyers over the last two years and we expect that proportion required to continue to rise.”

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