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.
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.
Just because it's from McWilliams doesn't mean it's right or wrong surely?Nothing new from McWilliams.
Yes, so there are some people who get cheap/free social housing and some people who get a tax-free handout from parents by luck of birth. I don't see anyone denying these groups co-exist. Then there is a 3rd (middle) group who do not enjoy these benefits.On the other end we have those who got a 'free' (below market rate) house from the system. This gives them greater disposable income than those who have to pay for everything. This house can also be passed down to younger generations and/or bought from the system at a greatly reduced price. The 'squeezed middle' will be Mackers next article in a few weeks time.
Surely allowing wealthy parents to give six-figure tax-free lump sums to their children is also the government interfering with the market?We all know the solution is to build more housing and have less government messing with the marker.
Exactly.In an age where many couples (some of them professional) will never have a mortgage made available to them or at best lucky to be able to scrounge a "starter" home where they'll eventually payout much more dearly than anybody..
Yes, so there are some people who get cheap/free social housing and some people who get a tax-free handout from parents by luck of birth. I don't see anyone denying these groups co-exist. Then there is a 3rd (middle) group who do not enjoy these benefits.
Couldn't agree more. Getting something for nothing, even if it is a gift from parents, is perverse and makes a mockery of the idea of social mobility and succeeding through hard work.It pushes up the price and reduces the supply for the nurse married to the teacher who can no longer afford to buy a house because the state has made it impossible for them.
At the other end, the children of the well off are bidding up the prices.
As a society, we need to prioritise the teachers married to the nurses and make sure that they can afford to buy houses within a reasonable distance of where they work.
Couldn't agree more. Getting something for nothing, even if it is a gift from parents, is perverse and makes a mockery of the idea of social mobility and succeeding through hard work.
Agree with this - the state is drawing from the same well as the average buyer.The state is buying up and renting a lot of privately built houses for social housing. OK, you say - that is fine. But it's not. It pushes up the price and reduces the supply for the nurse married to the teacher who can no longer afford to buy a house because the state has made it impossible for them.
Agree with this also - people getting 5 or 6 figure gifts from parents are leapfrogging over others who have to earn more and save longer to be in with a chance.At the other end, the children of the well off are bidding up the prices.
Agree with this also. These people are affected by both of the above state policies of A) buying up homes for social housing and B) giving huge tax breaks to wealthier families.As a society, we need to prioritise the teachers married to the nurses and make sure that they can afford to buy houses within a reasonable distance of where they work.
Agreed, gift money to whomever you like but they should all pay the same tax on it. Gaining wealth by accident of birth is a bizarre blind spot of free market economies.I am not opposed to inheritances or gifts from parents whatever the children use them for. ( I do believe that they should be taxed more heavily though.)
I still contend our welfare system is too generous which leads onto a way of thinking the State will look after people.It's similar in health where you have a big group with medical cards and GP cards (social welfare and OAPs) and another big group with private insurance. And often these overlap where you have many OAPs with both a medical card and VHI.
Then you have a smaller but significant group in between who have to pay for GP visit and prescriptions and must rely on the HSE for hospital care. Many of these are the same people caught in the centre of the housing squeeze.
It may or may not be deliberate policy but the effect is a divide and conquer approach that softens the pressure on the government of the day.
The state is buying up and renting a lot of privately built houses for social housing. OK, you say - that is fine. But it's not. It pushes up the price and reduces the supply for the nurse married to the teacher who can no longer afford to buy a house because the state has made it impossible for them.
To plays devil's advocate its not the fact the government is crowding out the market that is the real the problem - the chronic shortage of supply would likely have priced your nurse & teacher out of the market regardless - rather it's the fact it's not acknowledging or dealing with the side effects of its actions.
Pointing out distortions in the market and criticising a tax policy that exacerbates inequality is not creating a bogeyman. There are many contributing factors to our housing problems and it's perfectly reasonable to examine them, including parents helping their kids. There is rarely any pushback to the regular and generalised comments that many of us make about HAP, social welfare, etc. The middle class can't be barred from scrutiny.But this crisis needs a bogeyman. And seemingly wealthy parents helping their kids constitute just that.
Is state-provided housing the only alternative to a leg-up from parents? Could those who get a gift not do what others have and save?So there are quite a number of people complaining about parents giving their children a helping hand to purchase a property. The alternative to this is " should the parents leave it to the state to provide housing for them". This would put more pressure on the state.
I would love to see a list of the economically literate parties.There are no easy solutions and throwaway solutions by economically illiterate parties are not going to solve the problem.
The problem is a lack of housing. It's a chronic problem at this stage and as it gets worse it becomes less about the ability to own and more about having a roof over your head. While it would be better for society if we all could own a balance needs to be struck between fostering that environment and the basics of just having more properties.The main problem is the fact that the government is buying and renting privately built housing.
It would not be solved overnight by the government stepping out of the market.
But the number of houses available for first time buyers would increase so it would lessen the problem.
Wasn't this approach tried in thr past with negative side effects. The likes of Ballymun and Crumlin were designed to house the former occupants of the inner city tenements. While it achieved that it was also associated with a build up of antisocial behaviour.At the same time, the government should build social housing estates outside the most high demand areas where prices would be a lot lower.
Do you not see the irony in the current model. You have the working middle class who earn to much to avail of state housing but not enough to purchase without some family support.Pointing out distortions in the market and criticising a tax policy that exacerbates inequality is not creating a bogeyman. There are many contributing factors to our housing problems and it's perfectly reasonable to examine them, including parents helping their kids. There is rarely any pushback to the regular and generalised comments that many of us make about HAP, social welfare, etc. The middle class can't be barred from scrutiny.
Is state-provided housing the only alternative to a leg-up from parents? Could those who get a gift not do what others have and save?
I would love to see a list of the economically literate parties.
They are quite obvious if you want to see and hear them spouting off on radio/ tv/papersI would love to see a list of the economically literate parties.
Do you not see the irony in the current model. You have the working middle class who earn to much to avail of state housing but not enough to purchase without some family support.
To add insult to injury these are the very people competing with the State for the limited supply of new housing. Remember the Govt great part 5 condition to grant planning permission.
We had properties worth hundreds of thousands in very expensive areas given over to the State. Logic would have suggested take the value of the part 5 allocation and use the money to purchase more lower cost housing with the result of more properties available to the State resulting in more people housed by the State.
We are an open economy and we need to attract multinationals and a problem we have is our cost base. This cost base extends to everything from our income tax levels to our costs of business. We have an "entitlement" culture from the State were people want their "forever home" a comment that really bugs me.
?They are quite obvious if you want to see and hear them spouting off on radio/ tv/papers
But what tax policy exacerbates inequality?Pointing out distortions in the market and criticising a tax policy that exacerbates inequality is not creating a bogeyman. There are many contributing factors to our housing problems and it's perfectly reasonable to examine them, including parents helping their kids. There is rarely any pushback to the regular and generalised comments that many of us make about HAP, social welfare, etc. The middle class can't be barred from scrutiny.
Is state-provided housing the only alternative to a leg-up from parents? Could those who get a gift not do what others have and save?
I would love to see a list of the economically literate parties.
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