Gamma analysis reveals home affordability patterns across country

GAMMA, a leading location intelligence technology company in Ireland and the UK, reveals an analysis that shows the areas in Ireland where properties are least affordable.

This analysis is based on the equivalent national median household income for 2020, which was calculated to be approximately €55,000. Based on this and the assumption that the buyer is able to put down a deposit of €48,000, the median household could apply for a mortgage of €192,500 and purchase a home worth €240,500.

Utilising figures from the property price register, Gamma’s Location Labs found that the median price of all private residential sales across the country between 2019 and 2021 was €255,500 — more than the median household could afford.

While the analysis revealed that in many parts of the country, the majority of homes sold during this period were affordable, there were some exceptions to this trend due to regional variations in earnings for the median household and property prices.

For example, the shortfall in Cork city between what the median household could afford under mortgage borrowing rules (€209,000 – consisting of a mortgage of €167,000 and a deposit of €42,000) and the actual median property price (€245,000) was €36,000.

Other areas where this was the case were Dublin City (shortfall of €115,000), Dun Laoghaire-Rathdown (shortfall of €216,500), Fingal (shortfall of €16,000), Galway City (shortfall of €41,500), Kildare (shortfall of €8,000), South Dublin (shortfall of €48,000), and Wicklow (shortfall of €79,500).

In Dun Laoghaire-Rathdown where this gap was the most significant, some 87% of homes sold for more than what the local median household there could afford (€353,500). Albeit not to the same extent, this was also the case for many other areas including Dublin city (82%), Wicklow (73%), Galway City (66%), South Dublin (68%), Cork city (64%), and Fingal (57%).

Gamma’s Location Labs also looked at individual earnings and determined that in 2020, the median individual earned approximately €40,500. Provided the individual could put down a deposit of €35,500, they would qualify for a mortgage of €142,000 and could potentially purchase a home for €177,500.

However, between 2019 and 2021, only about a quarter of homes sold in Ireland went for this amount or less. Again, this varied across locations. While more than 70% of homes in Longford, Leitrim and Donegal cost less than the amount affordable to an individual in that county, under 10% of homes in Dublin and Wicklow fell within this budget.

Charlotte Cuffe, senior consultant with Gamma, stated: “It’s very interesting to see the patterns that emerge when comparing potential budgets to actual property prices, and especially when the CSO’s residential property price index recently revealed that the median home in Ireland cost 17% more in 2022 than in 2020. Of course, as with our analysis and the CSO’s calculation, there is great variation across the country.”