Why it would take 1,5 years for the average Irish to save for a house deposit
I read this morning this article from Lovin.ie: It's Gonna Take The Average Irish Person 21 Years To Save For A House Deposit.
A more accurate title would be "It's Gonna Take The Average Irish Person (WHO IS NOT SAVING TO BUY A HOUSE) 21 Years To Save For A Deposit."
These type of articles are meant to be sensational and drive viewers to them - but they ultimately discourage people from looking to buy, when they have a real possibility to own a house.
Let's break down the assumptions in the article, shall we?
Dubliners on the average wage of €36,919 a year are left with just €127.24 per month after rent and living expenses.
An "average" person can easily save €900/mo
Because of the intrinsic issue with averages, everyone's behaviour is flattened towards the middle: the number €127.24 is not indicative of those who are *actively* saving to buy a house.
Why? Because if your salary is €36,919 a year (€3,076 a month), after taking out various expenses (rent, groceries, transportation, etc.), you can easily save €900 a month, if not more!
If someone is serious about buying a house, then they would opt for (a) sharing their rental accommodation or (b) living with their parents / relatives for a few years, while they are saving up.
But let's say you can't or won't opt for sharing your accommodation - if the average apartment rental is €1,500 - you would have €1,576 at the end of the month.
If you're saving up for a house, you would also have limited expenses when it comes to groceries, outings, evenings out, etc. So lets remove €400 for groceries (€100/week), another €100 for transportation and another €100 for various other expenses = you would have €976 that you can save up each month.
it will take 21 years to save a deposit of €32,567 – the amount needed to buy a home with an average Dublin price of €325, 671.
If this is (a) your first house, (b) you're buying by yourself, and (c) you're doing your best to put together a deposit ... WHY WOULD YOU BUY A €325K HOUSE?!
A quick search on Daft.ie, brings up dozens of €175k house and under. They definitely need some renovation and they might not be in the most prestigious or pretty areas of Dublin.
However, if we take the example from before, you can save up the 10% needed for the deposit (€17,500.00) in 1,5 YEARS! If you save up €976/mo, you could actually fully pay for the house in 15 years.
Furthermore, this doesn't have to be your permanent house - it can be your stepping stone to a bigger and better house!
Even if you were to move in with someone to cut down on rent and increase savings to €300 a month it would still take nine years to save enough money for the deposit.
Even if your salary is €25,000/yr, you can still save up €783/mo!
Renting in Dublin is notoriously expensive, so let's say that you're lucky and you find a room for €700/mo in the city center. With a salary of €3,076 a month, and taking out €600 expenses a month... you have left €1,776!
Which means it would take you ONE year to save for a 10% deposit on a €175k house.
But of course this is assuming "average" person has a salary of €37k a year... when the reality can be very different. But even if your salary is €25yr, you can still save up €783/mo!
Obviously each situation is different; even just having a partner allows you to have a double income and double savings.