September 5, 2013
After years of falling prices, many hoped that such house panics couldn’t happen again.
It is like a 2005 nightmare all over again. In south Dublin a strange new phenomenon has emerged. It is, believe it or not, queues of hopeful house buyers – young parents with children – driving around looking at houses on a Saturday afternoon.
After years of falling property prices, many hoped that such house panics couldn’t happen again, but we were wrong.
These young parents bought small apartments in the mid-Noughties just before they had kids because this was all they could afford. Fast-forward seven years and they are all in negative equity but need to move out of the cramped apartments.
The problem is that so many want to move at the same time because whatever else might have happened over the past 10 or so years, their children are growing up at the same pace. Because of the baby boom today’s Dublin thirtysomethings find themselves, yet again, in a competitive property spiral made all the more problematic by negative equity inherited from the first boom.
In a sense, this is the generation that has been screwed twice.
They bought apartments in the Noughties not because they were being reckless but because they thought they were doing the responsible thing. The responsible thing then for the vast majority was “not to get left behind”, so they took the plunge with borrowed money in order to create a home for their impending families. Now that the young families have outgrown the apartment, they are all coming into the market for bigger houses at exactly the same time.
When you hear economists talk about the economy, it is usually measured in terms of sterile numbers like GDP or the balance of payments or something equally remote. But the economy is about people and the hundreds of thousands of individual small decisions taken each day at the kitchen table are, when aggregated together, what we mean by the economy.
If house prices rise once more, many thirtysomething parents will try to move as soon as possible, once again pushing up house prices in large parts of Dublin. The major problem in parts of the suburbs is that most of the housing stock was built in the 1960s, 1970s and 1980s and because people are living longer, the housing stock isn’t changing hands quickly enough.
This lack of available accommodation due to the longevity of one generation that is having an impact on the life of another generation, may well exacerbate trends that are already evident.
For example, Irish people are getting married much older than in previous generations. This is partly the result of a variety of economic trends, which have been amplified by the recent recession. But getting married later is not without its societal costs and evidence from the US indicates that getting married later impacts on different groups in society differently. Could the same impacts be observed here, and could the recent rise in house prices exacerbate these trends?
In America, marriage seems to acts as social ballast in people’s lives. Married twentysomethings tend to be happier and less maladjusted. For example, twentysomething men who are unmarried, especially singles, are significantly more likely to drink to excess, be depressed, and report lower levels of satisfaction with their lives, compared to married twentysomethings.
Thirty-five per cent of single or cohabiting men reported that they were “highly satisfied” with their lives, compared to 52pc of married men. For women the corresponding figure was 33pc of single women and 29pc of those cohabiting, both figures trail far behind 47pc of married women who are highly satisfied with their lot in life.
Like Irish adults, Americans of all classes are postponing marriage into their late twenties and thirties for two main reasons, one economic and the other cultural.
Culturally, young adults have increasingly come to see marriage as something they do after they have all their other ducks in a row, rather than a foundation for launching into adulthood and parenthood.
While the above trends have been going on for two decades, in the past few years, the lack of youth employment opportunities, the assumption that young workers will work for experience rather than money and the stubbornly high cost of accommodation are amplifying these marriage trends.
In Ireland, when one income was enough to support a family, men left school at a young age and went to work in a trade, which provided for their wife and family. Now that is no longer an option. They need to finish school and then many feel they have to follow that with at least four years in university followed by work experience before they are ready to ‘settle down’.
For Irish women, particularly those with third-level education, getting married later allows them to achieve certain milestones in their careers and, as a result, postponing marriage is good for balance sheets.
In 1977 the average age of grooms was 22.6 years. Today it’s 34. In 1977 the average age for brides was 24 and by 2010 it was 32.
But we can truly see the change in marrying age when we note that in 2010 in Ireland, only 4pc of grooms were under the age of 25 while 33pc of grooms were aged 35 and over on their wedding day.
When we see house prices rising again in certain areas and youngish parents pitted against each other in yet another example of the failure of the Irish planning system to anticipate the impact of demographic change, it is easy to conclude that we’ve learnt nothing from the bust.
People are getting married later and this trend will continue; we are having lots of babies just having them older. As these children grow up, these families need bigger houses and more space.
Its an extraordinary indictment of Irish public policy that six years after a property crash, a bubble is emerging in parts of the capital city while large parts of the country are home to ghost estates and all the while, people are postponing marriage and settling down precisely because they can’t afford it.