David McWilliams: Ireland’s ‘nepo-baby buyers’ are creating a two-tier housing system
He makes the argument that those lucky enough to be born into wealthy families (middle class now, not talking multi-millionaires) get a huge boost that multiplies their future wealth, begetting more inequality down the line:This assistance often involves down payments or the cosigning of mortgages, enabling the children to overcome financial barriers. According to data from the Banking and Payments Federation (BPFI), 42 per cent of new home purchasers used a parental gift toward their deposit.
No matter which way you look at it, the NBBs now constitute about half of the market for 25-34s. The housing market has been constructed, by way of various tax incentives, to be the way most Irish people accumulate wealth.
The implication for the 60 per cent of young people who do not have wealthy parents is obvious. They are shut out of the one asset that, rightly or wrongly, Irish people believe gives a stake in society and a wealth base to build upon. We can argue the rights and wrongs of this, but it is an essential financial fact in Ireland.
What’s more, the impact of inheritance on the prospects of young Irish citizens is becoming more pronounced. It’s a vicious cycle. Higher house prices beget more wealth, which in turn shut out more people but enrich those who can turn to Daddy and Mummy.
And this is even affecting renters:
For those left trailing behind, renting becomes the only option, driving up rents. But that’s not all – even in the rental sector, 41 per cent of renters rely on parental support to afford their rent (Daft.ie, 2023). Rich parents are not just distorting the buyer’s market, but the rental market as well.