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Ireland: More young people rented when rents fell during bust
By Michael Hennigan, Finfacts founder and editor
Jul 30, 2014 - 2:04 AM
Ireland: A research note published today
by the ESRI (Economic and Social Research Institute), examines the factors which
lead young Irish people (between ages 20 and 39) to form an independent
household and which also determine whether they choose to rent or to buy.
The note shows that about 20,000 more young people moved from parents’ homes in
2011 compared to 2006 -- however with rising rents in Dublin in particular in
recent times, the pattern has reversed and the propensity to buy has risen.
paper [pdf] says that a wide range of factors affect the timing of an individual's decision to set up
an independent household including: education, gender, whether they are
immigrants and the cost of housing. Income is significant in the decision to
move out from the family home and women tend to leave the parental home earlier
Since the property crash, falling rents saw individuals setting up an
independent household at an earlier age than before. In particular, the results
indicate that lower rents resulted in 2.3% more 25-29 year olds forming
households in 2011 than would have been the case before the crisis, with a 2.1% increase among 30-34 year olds. Rents have begun to rise again and, if
this continues, it is likely that in the future young Irish people will be more
likely to share accommodation, or to remain living at home for longer.
David Byrne, one of the authors, said "When house prices
increase, people often expect to continue rising, providing an incentive to own
instead of renting. After 2008, house prices fell considerably and so young
people had and incentive to rent."
He continued " Rent fell after the property crash, meaning young people could
afford to move out and rent, often sharing accommodation. This is a change from
what Irish people traditionally did. Rent has started to increase since, meaning
people will likely remain at home longer."
"Price expectations have begun to rise again, particularly in the Dublin area:
as a result, the model would suggest that 2.6% of those who would have
been content to rent, would probably now prefer to buy. This is contributing to
the upward pressure on house prices."
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