FUTURE RETIREES in Ireland are likely to have much lower rates of homeownership than current retirees, new research shows.
As a result, they are likely to be less financially well-off compared to current retirees as they will continue to pay rent when they stop working.
The ESRI estimates that 65 per cent of those currently aged 35-44 are likely to become homeowners by retirement given current trends, compared to 90 per cent of those aged 65+.
The research, funded by the Pensions Council, finds that reductions in homeownership of this magnitude could raise the proportion of older people (aged 65+) living in income poverty on an after-housing cost (AHC) basis, from 14 per cent at present, to as high as 31 per cent.
It also found that there has a marked drop in homeownership rates in recent years, particularly for younger-aged households, with the share of 25-34 year olds living independently who own their own home more than halving between 2004 and 2019, falling from 60 per cent to just 27 per cent.
The homeownership rate for those aged 35-44 is currently 58 per cent. The modelling indicates that under current trends this is likely to reach 65 per cent and with supports this age cohort could reach a homeownership rate of 71 per cent.
Dr Rachel Slaymaker, lead author of the report commented:
"Homeownership in retirement currently provides a double dividend – lower housing costs and higher assets in retirement. Our findings suggest that homeownership rates will be substantially lower for future cohorts, particularly those currently aged 45 and under. Without intervention this will lead to significantly higher rates of income poverty in retirement for these cohorts."
Roma Burke, Chair of the Pensions Council commented:
"The ESRI has predicted that 1 in 3 people aged 35-44 now won’t own a home by the time they retire. If you don’t own your home by the time you retire, your living expenses are still going to be significant, even if your income falls. This could cause many more older people to be at risk of poverty in the future, unless action is taken to address this important challenge."