Owning a home is a dream for many, as it represents a sense of pride, achievement, and security. However, with rising house prices in Ireland, it can feel like owning a home is increasingly out of reach for first-time buyers. In this blog post, we will explore the current state of the Irish housing market, discuss the challenges of saving for a deposit, and provide some tips on how to save and invest wisely for your first home.
The Current State of the Irish Housing Market:
According to the Daft.ie House Price Report 2018 Q4 Year in Review, house prices in Ireland rose on average by €1,000 per month nationwide during 2018, with an average inflation rate of 2.9%. This trend shows no signs of slowing down, making affordability a significant issue for potential homeowners.
Moreover, with most banks requiring at least a 10% deposit for a mortgage, saving for a house has become an even more challenging endeavor. For example, if you’re aiming to buy a €200,000 house, you’ll need to save at least €20,000 for the deposit alone.
The Challenges of Saving for a Deposit:
Traditional methods of saving, such as keeping money on deposit with a bank, are no longer as effective due to low interest rates. With most household money on deposit earning a paltry 0.07% per annum, it becomes increasingly difficult to grow your savings to match the rising house prices.
Furthermore, inflation plays a significant role in increasing the gap between your savings and the required deposit. For instance, if house prices rise by 3% annually for the next five years, the price of a €200,000 house will grow to €231,855, increasing the deposit required from €20,000 to €23,185.
Tips and Strategies for Saving for a House Deposit:
Set clear goals: Determine how much you need to save for a deposit on your desired home and establish a realistic timeframe for achieving this goal.
Consider alternative saving methods: Instead of relying solely on bank deposits, explore other investment vehicles, such as investment bonds or regular savings plans with a pension and investment provider. These options may offer better returns and help your savings grow faster.
Consult a financial broker: A financial broker can help you build and implement a tailored financial plan, as well as provide ongoing support and advice throughout the duration of your deposit builder plan. This professional assistance will ensure that you’re making informed decisions and staying on track to achieve your goals.
Average House Price Change Jan-Mar By County (Irish Independent)
| County | Average House Price | % Change Jan-Mar |
| Donegal | €150,000 | 3.40% |
| Kerry | €300,000 | 2.60% |
| Longford | €169,000 | 2.40% |
| Roscommon | €210,000 | 2.40% |
| Galway county | €225,000 | 2.30% |
| Tipperary | €217,500 | 1.80% |
| Sligo | €197,500 | 1.30% |
| Leitrim | €171,500 | 1.20% |
| Kilkenny | €265,000 | 1.00% |
| Wexford | €252,500 | 1.00% |
| South Co Dublin | €479,180 | 0.90% |
| Galway city | €334,000 | 0.90% |
| Limerick city | €272,000 | 0.70% |
| North Co Dublin | €418,300 | 0.40% |
| Meath | €297,500 | 0.40% |
| Dublin City | €498,333 | 0.50% |
| Monaghan | €200,000 | −2.4% |
| Carlow | €212,500 | 0.00% |
| Cavan | €168,000 | 0.00% |
| Clare | €230,000 | 0.00% |
| Cork county | €217,500 | 0.00% |
| Cork city | €355,000 | 0.00% |
| Kildare | €361,250 | 0.00% |
| Laois | €255,000 | 0.00% |
| Limerick county | €227,000 | 0.00% |
| Louth | €260,000 | 0.00% |
| Mayo | €190,000 | 0.00% |
| Offaly | €215,000 | 0.00% |
| Waterford county | €215,000 | 0.00% |
| Waterford city | €280,000 | 0.00% |
| Westmeath | €260,000 | 0.00% |
| Wicklow | €360,000 | 0.00% |
The data from the table highlights the varying changes in house prices across different counties in Ireland. While some areas like Donegal and Kerry have experienced significant increases in house prices with a 3.4% and 2.6% change respectively, other regions such as Carlow, Cavan, Clare, and Cork county have seen no change in the first quarter.
This information is crucial for individuals who are saving for their first home in Ireland, as it provides a clear picture of the current housing market trends.
Conclusion
Saving for a house deposit in Ireland amidst rising house prices can be a daunting task. However, with the right financial planning and a strategic approach to saving and investing, you can accumulate the necessary funds for your first home. By setting clear goals, considering alternative saving methods, and consulting a financial broker, you can navigate the challenges of the current housing market and make your dream of homeownership a reality.
If you’re ready to start the journey towards owning your first home and need expert advice, don’t hesitate to contact Riordan Financial. As a trusted financial broker regulated by the Central Bank of Ireland, Riordan Financial is dedicated to helping you make smart decisions about your money
