ONE IN THREE people aged 35-44 won’t own a home by the time they retire, according to new figures from the Economic and Social Research Institute (ESRI). 

The new research suggests that future cohorts of retirees are likely to have “substantially” lower rates of homeownership than current retirees, with only 65% of those currently aged 35-44 estimated to become homeowners by retirement versus 90% of those currently aged 65+.

The projected figures are even more stark for the 25-34 age cohort, with just one-in-two households likely to become homeowners by the time they reach retirement age in the majority of scenarios explored in the ESRI’s research. 

The report finds that such drastic changes in home ownership patterns could raise the proportion of people aged 65+ living in income poverty on an after-housing cost (AHC) basis, from 14% at present to as high as 31%.

Households are considered to be income poor on an AHC basis if their disposable income after housing costs – rental or mortgage payments -  is below 60% of median household disposable income. 

Commenting on the report, lead researcher Dr Rachel Slaymaker said: “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”. 

The research, entitled Future Trends in Housing Tenure and the Adequacy of Retirement Income, draws on data from the Survey on Income and Living Conditions and the Irish Longitudinal Study on Ageing and was funded by the Pensions Council. 

It highlights the marked drop in homeownership rates in Ireland in recent years – a trend felt most acutely by younger-aged households, with the share of 25 to 34-year-olds living independently in 2019 (27%) less than half of that in 2004 (60%). 

Older generations are less impacted by this phenomenon, with 80% of those aged 55-64 and 45-54 owning their homes versus 58% of 35 to 44-year-olds. 

The report also found that women and those living alone during working life are particularly vulnerable to income poverty in retirement after housing costs are taken into account. 

Although the ESRI research indicates that under current trends, home ownership among 35-44 year olds is likely to reach 65 per cent, it found that with support this age cohort could reach a homeownership rate of 71 per cent by the time they retire. 

The report states that while further income-based supports or direct housing cost interventions could be considered, such supports are likely to place significant costs on the Exchequer given the scale of the projected fall in homeownership for future retirement cohorts. 

It recommends that the supply and direct provision of social housing be increased as well as the development of targeted supports for those most at risk of poverty and of alternative, non-market renting options such as cost rental to lower the cost of housing in retirement which it says would reduce the share of retirees in income poverty.

Chairperson of the Pensions Council Roma Burke warned how future generations of elderly people may be affected if effective countermeasures are not implemented. 

“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,” she said.