According to a new study by the Economic and Social Research Institute (ESRI), one in five renters between the ages of 45 and 54 has little chance of ever owning their own home.
Research shows that this age cohort is at the forefront of a rising wave of a generation facing significantly worse retirements than current retirees.
It also warns that the state is unlikely to be able to fully bear the cost burden of a large number of people renting in old age.
The decline in homeownership rates is hitting younger adults in larger numbers, but is being felt across all working-age adults, the study shows.
While 90 percent of current retirees own their own home, this proportion drops to 80 percent among 45- to 54-year-olds.
Crucially, the researchers say this gap is unlikely to close significantly for these groups given their position in the life cycle.
That’s because middle-aged renters come under pressure from rents, rising house prices, and a decreasing ability to obtain a long-term mortgage as they approach retirement themselves.
While younger workers have more time to gain ground, the homeownership rate for 35-44 year olds is only 58 percent, although ESRI estimates that this figure is unlikely to exceed 71 percent through home purchases on the open market.
Homeownership rates will drop to as high as 50 per cent for today’s 25-34 year olds – a radical shift from decades when Ireland was characterized by mass home ownership and one with potentially massive social and economic consequences.
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The Future Trends in Housing Tenure and the Adequacy of Retirement Income report specifically focused on the link between home ownership and retirement, including a significantly higher risk of poverty in old age for those who do not own their own homes and are not eligible for social housing.
Economic simulations by the research team show a clear connection between the proportion of future pensioners in the private rental sector and the proportion of pensioners at risk of poverty.
Income poverty rates for people approaching retirement would reach 31 percent in a 63 percent low homeownership scenario; 28 units in a home ownership scenario of 70 units; and 21pc under a high home ownership scenario of 78pc.
Those numbers compare to 14 percent for people retiring in the next five years, of whom 92 percent will be homeowners.
According to the report, several factors are behind the decline in home ownership, including labor market dynamics, house prices, income, supply shortages and credit.
However, the main focus of the report is what will happen as a result.
Not surprisingly, women, people with a lower level of education and people who live alone during their working lives are particularly at risk.
The sharp and ongoing decline in home ownership is having a significant impact on retirement savings, which so far have been strongly supported by the so-called double dividend of home ownership – lower housing costs and greater wealth in old age.
Assuming mass home ownership is no longer a given, policymakers must consider ways to address rents for retirees or support their post-rental incomes, or possibly both.
Home ownership peaked in 1991 when 80 percent of people lived in condominiums, including a cohort of owners who are now retired.
Citing research from Belgium, Germany, Ireland and the Netherlands, ESRI said direct home ownership in Ireland had a particularly strong effect on reducing old-age disadvantage.
https://www.independent.ie/news/generation-rent-faces-an-old-age-of-poverty-as-middle-aged-renters-unlikely-to-own-homes-41817094.html Housing Crisis Ireland: Generation Rent is facing a ripe old age of poverty as middle-aged renters are unlikely to own their own homes