Is there too much reliance on the bank of mum and dad when it comes to property?

Is there too much reliance on the bank of mum and dad when it comes to property?

Where would we be without our parents?

At a basic level not alive, that’s for sure, but also probably not homeowners either if current trends are anything to go by.

According to new research from the Central Bank released earlier this week, first-time buyers are relying on the so-called ‘bank of mum and dad’ to get a deposit together.

Indeed, one in five new buyers admitted to getting a hand out to help them put the funds together for a down payment on a new home.

According to the Central Bank, the average amount gifted is €10,000 or around half of the funds needed for a deposit.

While this is broadly in line with European standards, it is something of a worry.

Last year prices grew by around 7% and they are expected to have similar growth this year.

While the new help to buy scheme for first-time buyers is welcome, it doesn’t change the fact that for the most part as prices rise so too will the level of deposits required.

With rents also on the rise, it will become that much difficult to get a deposit together – let alone a mortgage – therefore putting more pressure on parents and other family members to help out.

According to the researchers, the average Dublin first-time buyer had a deposit of €50,000 last year with an average of €25,000 outside the capital.

The Dublin rate has been growing since 2012 making it harder for the one third of those between the ages of 26 and 40 who are renting and currently saving for a deposit to finally get a home of their own.

In 2010, first-time buyers represented 53.1% of all household market transactions filed but by last year, first-time buyers’ share tumbled to just 24.4% of the market. At a time when more is being done to encourage first-time buyers, they are finding it more and more difficult to get a home that suits their needs.

Earlier this week the Housing Agency said there was a need for 81,000 new homes between now and 2020. That’s a target unlikely to be reached meaning prices will continue to rise and more pressure will be put on the bank of mum and dad.

Is it fair thought to ask your parents for a dig out?

Let us know your thoughts…

  • Have you benefitted from the bank of mum and dad towards a house purchase?
  • Should deposit rates be relaxed for those with a history of paying higher rents than the rate of mortgage they would have to repay?
  • Are the deposit rates too high?

Have have your say below…

There are 4 comments for this article
  1. Sickened by investors at 8:01 pm

    I’m a home owner of a few years now and when we were buying we were up against investors on numerous occasions – I know this because I followed the sale of the house and check for it being rented. I’ve some friends who are in the midst of buying a house and again they’re up against investors buying a mortgage with monthly repayments almost half of what they get from rent. It sickens me to see this, to see people owning multiple places and can only afford to pay back the loan by raising the rent because they’re financially under pressure. Get rental prices under control, force landlords to actually provide livable rentals and possibly give first time buyers preference over those buying for investment — I know it’s a free market.

  2. Avinash at 8:47 am

    Government should have a way of controlling rent and sales increase and there should have been a limit on areas
    Since Government help to buy is introduce , house prices went sky high
    There is no difference buying a house in Dublin commuter or Dublin outer areas.
    How is that not possible to ask for help to buy !

  3. People economist at 7:37 pm

    The situation definitely break every body’s bank self , parents. The rental market is forcing people to get on to property market to buy. That is the bitter truth. Real estate agents and Developers are raising rates just like pre-recession levels taking advantage of it . There is no control on it. Banks was bailed out of public money and USC is still being paid. Banks likes people to take more mortgage just like pre-recession and cost of credit is way higher than germany for just as an example. In the name of affordable houseing again consumer will get a small size home of less than 100 sq.meters at very high cost. Cost comparison is done with pre-recession levels for justification.
    Consumer learnt had lessons hard with mistakes of pre-recession. No one likes to put their hard earned money. Government, agents , developers and banks again creating same situation to break and force the consumer to put their life savings. Only consumer can stop this, but consumer is the one who is forced. Please think consumers, one is not buying a home, you are putting your own money to buy mortgage and not home. Wages are not rising then how will consumer will close mortgage. At this high cost, breaking your parents banks savings and your bank savings , all that consumer is buying is a mortgage and not home. Please think again who ever reads it. You will buy home when price is affordable to close the mortgage realistically in 10-12 years. I am not discouraging anyone. Request to Government, please make individual contributions of USC over the years as a contribution to a deposit. It is people money needs to go back to people again and not to capital market. Consumers please wake up back to reality, consumers make or break demand.

  4. Pedantic Panda at 4:37 pm

    I’m a home-owner but I think that it’s crazy and really unfair that people who are paying enormous rents don’t necessarily have access to mortgages on which the payments would be equivalent or less. That said, I think that it’s wise to try and stop the market overheating but the rental market is what’s driving so many people to buy. Better rent control (or less tax/more incentives for landlords who rent at more realistic levels) and you have fewer people looking to buy and fewer families driven to homeless lists/shelters/etc.

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