Galway’s affordability gap is growing
PROPERTY
Property Insights with Johnny Gannon, Fair Deal Property
The latest transaction data tells a blunt story. A typical first-time buyer home in Galway sells for around €380,000. With a ten per cent deposit, that leaves a mortgage of €342,000 and, under the four-times-income lending limit, requires gross household earnings of approximately €85,500.
The real affordability problem relates to the widening gap between what work pays and what housing costs. Average weekly earnings nationally increased by 3.9 per cent over the past year, while residential prices outside Dublin rose by 6.4 per cent. That growing differential illustrates the pressure buyers are experiencing.
The danger is compounding. If current growth rates persisted, a €380,000 property rising by 6.4 per cent annually would reach approximately €518,000 after five years. An income of €44,000 growing by 3.9 per cent annually would reach just over €53,000. Under standard first-time-buyer lending limits, the gross household income required for that property would rise from €85,500 to approximately €116,500. The affordability would increase from €41,500 to more than €63,000.
This is an illustration rather than a forecast, but it demonstrates how even a modest annual difference between property-price and wage growth becomes considerably more pronounced over time.
We must also remember that not everybody receives a pay rise. Many workers see earnings remain flat for years, work in sectors with limited progression or depend on variable hours. For somebody whose €44,000 income did not increase, the illustrative five-year gap would exceed €72,000.
This is why “wait and save” is no longer universally sound advice. Saving remains essential but waiting in the attempt to ‘time the market’ can actively weaken a buyer’s position when property prices compound faster than their savings and borrowing capacity.
Home ownership is becoming increasingly dependent on two salaries, existing equity, family assistance or State support, while those relying solely on earned income continue to fall further behind each year. The solution cannot simply be to tell people to save harder or borrow more. Galway needs a greater supply of smaller, entry-level homes priced in line with local earnings, alongside wider access to affordable-purchase and cost-rental schemes.
For sellers, affordability pressure does not mean every property will sell at any price. Buyers remain constrained by income, lending rules and repayments. Strategic pricing and superior marketing are becoming significantly more important as prices continue to rise.
For more information visit www.fairdealproperty.ie