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Aviva Family Finance Report 2019

Almost 1.4 million Irish adults expect to be buying a home over next five years, according to new Aviva research

  • Slowdown evident in Irish economy amidst fears of impact of Brexit
  • Increased optimism around work/life balance
  • Gender inequality remains a feature in the workplace

Monday 21 October 2019 - Dublin: Almost 1.4 million adults expect to buy a property over the next five years, according to Aviva’s Family Finances report 2019.  Just over half of those who do not currently own their own homes plan to buy one, an increase of 2%, with a 5% increase in those looking to downsize since the last report in 2018.   This will see approximately 1.07 million first time buyers and those trading down likely to be in competition with each other for similar sized properties.  Given the shortage of housing stock available, this is likely to add significantly to the crisis already visible in the property market and to result in higher prices, making the dream of owning your own home even more challenging, particularly in Dublin and other urban locations.

Aviva’s latest Family Finances report, the fifth in the series, has continued to track the progress made by the Irish economy in recent years and whether it has had a positive impact on many individuals and households. When asked if they are in control of their finances, some 63% said they were compared with 18% who did not feel in control. The gap this year is 45 points which compares favourably to a gap of 26 points in 2016 (52% -26%) which is a good indicator of just how confident many people have become in relation to their financial position over the last number of years.

A consistent feature in the survey over the years has been the insightful narratives provided by breaking down households into three categories – comfortable, struggling or neither.  The number of people who view themselves as living comfortably has, for the first time, exceeded those who are struggling to get by, at 29% to 27%. This is now most notable in the 35-44 age group (31%) who have improved by 8 points from last year’s survey, while 45-54-year olds have been slightly more likely to claim to be struggling than they were last year at 38% (+3).

However, there are still just under one million people (27%) who remain under pressure financially which is a significant proportion of the population and one that could rise quickly in the event of an economic downturn.

Whilst attitudes to general financial wellbeing remain relatively unchanged since the last survey in May 2018, there has been a sharp decline in the number who agree that the recovery in the economy is under way (-8%).  There is strong concern evident that Brexit will impact negatively with 78% of those surveyed expressing concern, whilst 56% believed that it would have a negative impact on them personally.  Similarly, there is a strong fear (78%) that further strong growth will be followed by another crash.

Looking to home ownership, the research findings show that 31% own their home without a mortgage, 27% have a mortgage, 23% are renting privately and 11% are living with parents or friends.  Turning to those renting, the latest available national figures show the average rent has reached a record high at almost €1,400 per month.  This average is substantially higher for those living in Dublin, where the average rent is just over €2,000 per month.

Commenting Richard Jones, Head of Life & Pensions with Aviva said: “Given the significant increases in the cost of renting and the lack of rental properties available, particularly in urban areas, it is not surprising to find that approximately four in 10 adults believe they will be in the property market in the next five years.  This is further evidenced by the level of savings with respondents saving on average €6,000 per annum”.  

Savings accounts continue to be the most popular form of financial product with 66% of those surveyed having one.  Interestingly, 54% of those surveyed believed that a pension was the second most important financial product to hold, yet only 34% claim to have one.  This is despite the fact that those saving in deposit accounts are getting negative real returns, whilst those investing in their pension are benefiting from the generous tax benefits available.  

The average monthly saving per household is almost €500 (+5%), with those saving between €501-€1,000 per month increased by 4%.  Renters are saving on average €493 per month (down from €630), with those with mortgages saving less at €432 per month, again down from €580 last year.

Worryingly, our survey highlighted that more than half of respondents (55%) claimed to be unaware of the tax benefits of saving into a pension.  These statistics and the continued low coverage of private pensions (34%), should encourage Government to ensure that the introduction of auto enrolment is implemented within the stated deadline of 2022.     Whilst we would always encourage individuals to hold a certain amount of cash as part of a balanced portfolio of investments, we would encourage consumers to explore other investment opportunities for their hard-earned savings that would provide them with the potential to get a better long-term return.  This is even more important in a negative rate cycle when, taking inflation into account, savers are likely to be losing money”, concluded Richard Jones.

One of the more positive insights in the report points to the fact that we have a much happier workforce evidenced by 42% (+9%) of those surveyed admitting to feeling less stressed in their job nowadays, whilst 46% (+7%) think that their work-life balance is better.  Some 30% (+5%) of those working say they work fewer hours than was the case a few years ago.  This may be as a result of more flexible options being made available to workers at a time when we are experiencing almost full employment.  

However, on the negative side, there are concerns in the area of personal taxation with 59% (+9%) expecting that income tax rates will rise and that investments will not perform as well as previously, 51% (+8%).  Again, almost 40% of those surveyed thinks that it will be difficult to move jobs whilst 53% (+3%) believe that opportunities to progress in their current role will be limited.

There has been an increased focus and debate on gender equality issues in the workforce both in Ireland and internationally in recent years, particularly in relation to pay and representation at board level in companies.  In our survey, whilst over half believe that women are paid the same as men, there is a sizeable minority (33%) who believe the opposite and 31% who believe that women have less opportunities than men in their workplaces.  This suggests that much more work needs to be done to achieve a greater level of parity for women in the workforce.

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