Gifts from the bank of mum and dad are pushing up property prices and widening the social divide
Sometimes substantial gifts from the bank of mum and dad can skew the property market and push prices up for everyone. Photograph: iStock
“I would say that it has become particularly noticeable over the past five years, it’s now quite significant,” he says, adding that in his experience in the Dublin market, “at least seven out of 10 are now getting gifts”. Brian Dempsey, a partner in DNG Stillorgan, says a gift from the bank of mum and dad now “plays a pivotal part in buying a home in today’s market”.
Ultimately this inheritocracy is having a direct impact on rising inequality in terms of access to the housing market And thanks to gifts, home buyers don’t always have to stretch themselves when it comes to borrowing. Figures from theshow that home buyers now typically buy a home with a significantly higher down payment. The average loan to value on a first-time buyer loan in the first quarter of last year was less than 80 per cent, indicating a typical 20 per cent deposit.
But the level of gifting means that some first-time buyers are now skipping the typical starter home stage and going straight for the if not quite forever home, then a home for the longer term.“It can be the difference between living in one part of Dublin compared to another,” adds Dowling, “or buying a three-bed rather than a two-bed, or one that’s in better condition and doesn’t need renovations”.
After all, if the relationship breaks down, and the home is sold, it can be difficult to recoup the money given as a gift, as it’s likely it will depend on the party who didn’t receive the gift to “do the right thing” and give it back.
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