For evidence of the housing-affordability challenge facing teachers, look no further than the school gate. With the average loan for a house purchase exceeding €300,000 nationally, for many teachers the numbers just don’t add up.
There are up to 3,000 long-term vacancies in primary schools, says the Irish National Teachers' Organisation (INTO). “The housing crisis is the biggest contributing factor,” says INTO chairman John Boyle.
Schools in Dublin and its surrounding counties are finding it particularly tough to attract staff because homes there have become unaffordable for the profession.
“Two-thirds of teacher vacancies are in Dublin alone, and a considerable number are in Louth, Kildare, Wicklow and Meath,” says Boyle. “Fifty per cent of schools in those areas told us they were not able to fill their vacancies.”
Spiralling prices in the past five years are putting homes out of reach. The median or mid-value price paid for property by a first-time buyer in the first half of last year was €360,000. That’s €88,000 more than five years ago, according to Banking and Payments Federation Ireland (BPFI) figures.
“If you’re a teacher who has about 10 years’ service, that’s someone who is 33 or 34, their salary is €61,410,” says Boyle. That is point 12 of a 27-point salary scale that can rise to a maximum of €80,300 over a teacher’s career.
Salaries for secondary schoolteachers are slightly higher at each salary point.
Mortgage rules limiting first-time buyer mortgages to four times income means young teachers can borrow just €245,000. But the average mortgage value of a first-time buyer nationally is €290,000, according to BPFI data.
“Four times the salary after 10 years' service is not going to get you a house at the national average; it wouldn’t even get you half a house in Dublin,” says Boyle.
Scale up
Waiting, and gradually climbing up the teacher salary scale, is the no-nonsense strategy of many teachers trying to buy a home.
“For teachers who are single applicants, it’s extremely difficult,” says Aisling McNamara, a mortgage adviser with mortgages123.ie. “The single-applicant teachers we would see get through, they have been teaching for a long period of time.”
As the maximum mortgage available to a first-time buyer is 90 per cent of a home’s value, a single primary schoolteacher with 10 years’ service could potentially buy a home for €273,000 by borrowing four times their salary, or €246,000, and having a hefty 10 per cent deposit of €27,000.
Teachers should know, however, that banks may offer them some latitude that private sector workers don’t get, says McNamara.
“They may take into account that a teacher will go up the salary scale over time, and their future earnings can be used to give them a higher income for borrowing purposes,” says McNamara.
“We can apply for a mortgage for them using what they are going to earn two points up the scale. If you are on point six, for example, we can jump to point eight. You cannot do this for private sector workers.”
A two-point jump up from the 12th to the 14th point in the salary scale will increase a teacher’s borrowing potential to about €261,000.
The further up the scale you go before looking for that home loan increases this multiplier. That means waiting.
[ Is help-to-buy a vital support for house buyers or is it just pushing up prices?Opens in new window ]
Government schemes
McNamara sees solo first-time-buyer teachers borrowing about €260,000 and availing of Government schemes to get them over the line.
The Help to Buy scheme will give a refund of up to €30,000 of income and deposit interest tax you have paid in Ireland over the four years before the year you apply.
This can be used to bump up your house deposit, but it applies only to new-build homes valued at up to €500,000.
With average rents in Dublin in particular savaging after-tax income, teachers living there can find it impossible to save for a deposit.
Cost-rental accommodation proposed by Government to alleviate recruitment shortages in schools recognises this. The accommodation for key workers, priced 25 per cent below local rates, is welcome, says John Boyle, but rents are still too high for many to save for a deposit.
He cites a two-bed apartment at a cost-rental scheme in Tallaght for €1,715.
“Paying €857.50 each for two teachers is still not really that affordable,” says Boyle, although at about 23 per cent of net income, it is below the median, which is about 30 per cent.
The Help to Buy scheme can help bridge the deposit gap.
“Starting out, a teacher is not going to get the full €30,000 rebate on a Help to Buy, they may get a lot less [as they have paid less tax], so it takes a bit of time to build up what they are going to get,” says McNamara. Where a teacher has worked abroad in recent years, they may not have paid enough tax here to qualify for a full rebate either.
Another option for first-time buyers is the shared equity, or First Home Scheme. This can be used in conjunction with the Help to Buy scheme.
Under this scheme, the Government and participating banks pay up to 30 per cent of the cost of your new home (or 20 per cent if you’re also getting Help to Buy), in return for a stake in the home. If you want, you can buy back the stake at any time, but you don’t have to.
It is aimed at closing the gap between what you might be able to afford, and what you want to buy.
In the local authority areas of Dublin City, Dún Laoghaire-Rathdown, Fingal, South Dublin and Cork City, there is a price limit of €475,000 for buying a new house and €500,000 for an apartment.
In Co Wicklow, the price limit is €475,000 for all properties. In Co Kildare, Co Meath and Co Cork it’s €425,000. In Limerick city and county, the price limit is €400,000 for houses and €450,000 for apartments.
You must borrow the maximum available to you, so four times your income, and you must have a 10 per cent deposit of the value of the home, though this can come from the Help to Buy scheme.
A teacher after 10 years’ service, for example, will be able to borrow a maximum of about €261,000.
By using Government schemes, they could potentially purchase a home for about €375,000. This is through a combination of €10,000 of their own savings and €30,000 from Help to Buy making up the deposit; personal borrowings of €261,000, with €74,000, that’s 20 per cent of the purchase price of the home, coming from the First Home Scheme.
Finding any new build property in Dublin for €375,000, however, will be challenging. Single buyers may have to forgo grants to buy a second-hand apartment, which are more plentiful.
[ First-time buyers: ‘Should we buy an apartment or a doer-upper?’Opens in new window ]
Current MyHome.ie listings of second-hand properties at the €280,000 price point, for example, that don’t require spending on essential renovation, include one-bed apartments in west and north Dublin. For those teaching in suburbs along the southbound Dart line, there are no such properties listed.
Couple up
Buying with another person can give you a leg up to home ownership. Two teachers, each with 10 years’ service would get a mortgage of €490,000 between them.
If a bank allows them to borrow two points up in the salary scale, it could boost their borrowing capacity to €520,000. Homes valued at more than €500,000, however, don’t qualify for government support schemes.
While a joint salary will unlock housing for teachers in some parts of Dublin, many areas are a housing desert for key workers. The median house price in Dublin 14 last November, for example, was €658,500, according to CSO figures. In Dublin 16, it was €585,000 and in Dublin 18 it was €636,000.
North of the Liffey, prices come down somewhat. In Dublin 13, the median house price was €510,000 and in Dublin 3 it was €477,000.
Move out to the commuter belt and the median house price in Bray is €530,000, €450,000 in Dunshaughlin and €435,000 in Naas.
!['There is absolutely no guarantee after having children that they are going to have the salary [to buy a house] because there is a further crisis in childcare.' Photograph: iStock](https://www.irishtimes.com/resizer/v2/NBKK55JXPBHHFKDILUESWQSW2Q.jpg?auth=f11c951a77d99c7d4bc64e4b45d5615df873434078d9e3df3bb038da7f5ebea6&width=800&height=533)
For teacher couples planning children, timing their mortgage is crucial. Once children arrive, those who continue working are hit with childcare costs, which peak in the first three to five years of parenthood. This expense will curtail how much they can borrow.
“There is absolutely no guarantee after having children that they are going to have the salary [to buy a house] because there is a further crisis in childcare,” says Boyle.
“We are finding that a lot of our members have no choice but to opt to go off salary for a while. They can’t get affordable childcare, it’s like another mortgage.”
Location, location
Teachers wanting to buy a home could use the strategy of considering permanent posts only in locations where housing will be accessible to them. That means outside the capital.
“You see a lot of people moving outwards. New builds on the outskirts of Dublin, they are buying them,” says Aisling McNamara.
Increasingly, people are moving farther afield, says Trevor Grant of Affinity Advisors and chairman of Irish Association of Mortgage Advisors.
“They are desperately trying to secure new homes because, with new homes, you have the benefit of the Help to Buy and First Home Schemes,” says Grant.
Unlike many first-time buyers chasing Help to Buy grants on new builds in outer parts of the capital and its commuter counties, teachers can’t dodge a commute by working from home.
“If you are two teachers, you will qualify for a mortgage after 10 years for €490,000,” says Boyle. “That will sort you out in plenty of places, but it’s very, very clear that it’s not going to fully sort you out in Dublin.
“It’s not that we are happy about the four times multiplier either; it’s putting people in hock for the rest of their career.”
Teachers and other key workers who are househunting would do well to job hunt with some statistics in mind.
The lowest median price paid for a dwelling was €180,000 in Leitrim and Longford, according to CSO figures. The highest was €654,999 in Dún Laoghaire-Rathdown.
The least expensive Eircode area over the 12 months to November 2024 was Clones, Co Monaghan, with a median price of €127,000, according to the figures.
By opting for roles where property prices are less steep, teachers have the option to spend much less of their income servicing debt. Is it any wonder two-thirds of teacher vacancies are in Dublin?
