Readers like you keep news free for everyone.

More than 5,000 readers have already pitched in to keep free access to The Journal.

For the price of one cup of coffee each week you can help keep paywalls away.

Support us today
Not now

It's taking up to a third of a working couple’s income to pay the mortgage on their first home

The least affordable area for first-time buyers is Dun Laoghaire Rathdown in Dublin, while the most affordable county is Roscommon.

Image: Shutterstock/ESB Professional

IT CAN TAKE up to 34% of a working couple’s combined after-tax income to pay for the mortgage on their first home, according to the EBS DKM Housing Affordability Index.

The index measures the proportion of after-tax income required to meet the first year’s mortgage repayments.

Looking at a working couple earning €36,600 each, it found repayments can cost anywhere between 7% to 34% of their after tax income, with considerable differences depending on location.

The least affordable area for first-time buyers is Dun Laoghaire Rathdown, Dublin where it takes almost 34% of after-tax income to pay the mortgage.

Outside of Dublin, the least affordable counties are Wicklow, where mortgage repayments account for 26% of after-tax income, followed by Kildare (22%) and Meath (21%).

The most affordable county is Roscommon, with an average price of €73,000, taking just 7.4% of the couple’s after-tax income to fund a mortgage, while it’s 9.8% in Mayo.

For single first-time buyers earning around €55,000, housing affordability remains very challenging at an average of 31.4% of their net income.

shutterstock_6835834 Source: Shutterstock/Peter Cox

The average first-time buyer property price nationally was €232,552 in August 2016 implying a mortgage of €195,344, assuming an average 84% loan to value ratio.

The corresponding monthly mortgage repayment was €1,009 which compares with the average monthly rent nationwide of €1,037.

Making a difference

A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article.

Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation.

For the price of one cup of coffee each week you can make sure we can keep reliable, meaningful news open to everyone regardless of their ability to pay.

Meanwhile, the average first time buyer property price in Dublin was estimated at €314,303 –  which would mean an average mortgage of €264,015, also assuming an 84% loan to value ratio.

That would leave the average monthly mortgage repayment at €1,364 as average monthly rents in Dublin are between €1,351 to €1,735.

Director of DKM Economic Consultants, Annette Hughes, said that “the average first-time buyer couple paying the average price of €232,552 for a new home would have had to raise a deposit of €37,208 under the macro-prudential rules, based on our assumption of an 84% loan to value ratio.

“However, the Help to Buy incentive in the form of a tax rebate of €11,628, effectively reduces the cash deposit required to €25,581, which should have a positive impact on affordability, provided it is accompanied by an increase in new homes.”

Read: Investors blamed for ‘dramatic’ rise in Dublin house prices>

About the author:

Read next: