New research focuses on regional patterns to housing affordability and house price sustainability

November 13, 2019
Group photo taken at ESRI Housing Conference on 13 November 2019

Rachel Slaymaker and Matthew Allen-Coghlan (ESRI), Alan Barrett (ESRI Director), Eoin Corrigan (Department of Housing, Planning and Local Government), Eoghan Murphy (TD and Minister for Housing, Planning and Local Government), Kieran McQuinn and Conor O’Toole (ESRI) at the launch of this research on 13 November 2019. 

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Two new research reports by the ESRI, conducted under a research programme with the Department of Housing, Planning and Local Government, provide insights into the differences in first-time buyer housing affordability and house price sustainability at the county level in Ireland.

The first study considers the sustainability of regional housing markets by looking at the rent-to-price ratio or market yield. By sustainability, we mean the extent to which rent-to-price ratios are explained by economic fundamentals. The paper presents a Heat Index to measure market sustainability over time and across counties. These indicators suggest that house price levels across the country do not display signs of being unsustainable and are broadly in line with economic fundamentals. However, continued monitoring of differences in market dynamics on a regional basis are required going forward.

The second study undertakes an examination of housing affordability for potential first-time buyers at the county level. The research estimates the percentage of monthly income that would be spent on mortgage repayments by the average buyer. The findings suggest that, in 2018, potential first-time buyers would spend more than 30 per cent of their income every month in Dublin, Wicklow, Kildare and Meath highlighting the greater affordability pressures in and around the capital city. Affordability pressures are not as evident in other counties.

Conor O’Toole, ESRI research and author of the report, commented: “While house prices across Ireland appear to be well explained by economic fundamentals such as labour market developments, affordability continues to be a challenge. Our research suggests that affordability challenges for first-time buyers are concentrated in urban markets, in particular around Dublin. Policies to increase the supply of affordably-priced homes continue to be critical but can be complemented by demand side supports for deposits and mortgages.”


An infographic illustrating key findings from the research is available to download here