As February nears its end and the 1st of March looms large, we witness the end of Winter almost a month earlier than usual. As the days grow longer, we reflect on the people who are homeless and the families without a roof over their heads.
There are 10-thousand people homeless in the Republic of Ireland, and 12-thousand either homeless or on a housing list in Northern Ireland. The answer to this problem depends on who you ask: The ‘A’ plan is to build more houses for the growing population, with the estimated need at 35 to 40-thousand houses per year going forward. Despite this huge need for houses, we only built 18-thousand in 2018 and are set to build 23-thousand in 2019.
I think that the difficulties in building large volumes of houses are the Central Banks’ rules on lending, the availability of land in urban areas, and the lack of a skilled work force. The Banking rules on mortgages are; for first time buyers, you must have 10% of the property’s value in dry stuff, cash (or other acceptable equity, such as a site). For second time buyers, that increases to 20%. The most anyone can borrow is 3.5 times their basic income. The reality faced by anyone looking to buy a house in modern-day Ireland becomes very stark indeed, as in our cities such as Dublin, 3-bed estate houses are valued upwards of 330k, and 4-bed houses often breaking 495k (almost a cool half-mil).
This effects the age at which families now get their mortgage at. This also pushes the age of marriage, having a family, and the mortgage 10 years on. Nowadays, you are almost 40 years of age when you are fit to buy a house. It’s worth noting that of the number of houses changing hands in 2018, 55% were purchased by cash customers, most of which go back to the rental market. The people who lose their house through financial difficulties have their house sold, sometimes to a vulture fund by the banks, at two thirds of the value.
It’s also worth noting that 28-thousand mortgages are in arears for more than 2-years, which means there’s an awful lot more heartbreak on the horizon. There are 37-thousand mortgage cases before the Courts for discussion. This is 8% of all mortgages. So, the end game for customers, distressed mortgages, and banks still have a long way to run.