Fewer than one-in-five workers across Galway earn enough for a mortgage to buy an average priced house.
With the median house price in County Galway calculated to be a whopping €380,000, a first-time buyer acting alone must earn at least €85,500 per year before tax to qualify for a mortgage if savings or debt are not factors.
The county has by far the highest income requirement along the west coast to purchase a home, according to new statistics compiled by Chill Insurance, and has the seventh most expensive average house price across the Republic.
Although first time buyers in counties Dublin, Wicklow, and Kildare must earn more than €100,000 per annum to qualify for a mortgage under mainstream Central Bank rules, the Galway requirement is still nearly double the median national salary of almost €45,000 per year – requiring house hunters here to be in the top 15 per cent of earners.
The median county income per annum is almost €44,000. This tracks well nationally, as Galway has a high concentration of well-paid medical device, pharmaceutical and technology jobs, but it is still far below the gross income a worker needs to qualify for a high street mortgage, and this ‘purchase gap’ is €41,505 across the county.
According to Central Bank lending rules for mortgage companies, a first-time buyer may borrow up to 90 per cent of a home’s value, and up to four times their gross income, unless they qualify for an exception allowing them to borrow 4.5 times income. A non-first time, standard mortgage is typically capped at 3.5 times income, and usually requites a hefty deposit.
Based on analysis of 2022 Central Statistics Office earnings distributions and Revenue employment records, the Galway Advertiser has calculated that only 16,900 of County Galway’s 125,500 workers (roughly 14 per cent ) earn at least €86,000 per year. It is unlikely many of this cohort will be first-time buyers.
Chill Insurance’s calculations are a measure of borrowing capacity against median prices and do not account for deposits already saved, existing debts or other outgoings.
Reacting to the figures, Galway West TD Mairead Farrell (SF ) said Chill’s income requirement calculations illustrate deeper societal issues, especially in Galway city where house prices are generally more expensive than across the county.
“The reality is that we just don’t have a supply of affordable houses – especially in the city – and it really is a serious issue when the majority of working people simply can’t afford to buy a home. It’s unbelievable.
“Paying huge rents here is also extraordinarily difficult for anyone, and this leads to intergenerational impact where people can’t afford to raise children near grandparents. This is causing stress, and leading to fragmented communities,” she said, adding that in the Merlin area near where she lives, affordable housing promised seven years ago has still not materialised.
Dublin remains the least affordable county, with a single buyer needing to earn €108,000, but Wicklow (€101,250 ) and Kildare (€100,238 ) have now joined it above the €100,000 mark. A year ago, Dublin was the only county above that threshold. On €85,500, Galway follows counties Meath (€96,750 ), Cork (€92,092 ) and Louth (€87,750 ).
“The Chill report emphasises the nationwide nature of the problem would-be homebuyers face,” says economist Austin Hughes. “Even allowing for ongoing wage growth, in no county is the typical, first-time buyer property accessible at present to the median wage-earner, unless they are in a position to get additional financial support from the State and/or their family.
“With would-be buyers in Dublin and surrounding counties now needing around twice the typical wage in those areas, and approaching that in Cork and Galway, this ‘purchase gap’ is growing and spreading in a worrisome manner.”
Affordable homes
For working people whose mortgage applications are rejected by high street lenders, at least 150 new affordable homes are due for completion in County Galway in 2027, while an estimated 100 units deemed affordable are in the planning process in Galway city, with just five due for completion next year.
The government’s Housing Agency provides a type of mortgage for affordable homes for workers on moderate incomes, whereby local authorities take an equity stake in the property, so if a first-time buyer gets, say, a 20 per cent discount on the market price, the local council owns a 20 per cent stake in the home. This must be repaid if house is resold in the future.
To qualify for ‘affordable’ housing - now known as ‘Starter Homes’ by local authorities- a first-time buyer must posses a 10 per cent deposit, have a purchasing power (income multiplied by four ) below specific limits related to an appropriate property’s market value (€375,000 max in Galway city; €345,000 in the county ), and progress through 17 administrative hurdles set out by Galway County Council.
It is unclear how many bureaucratic stages buyers seeking affordable homes in Galway City Council’s jurisdiction must complete, but it is likely similar.
