First-time buyer activity and spend is up, reports Trish Dromey.
The increase in building activity hasn’t matched demand but it has, along with the availability of the Help to Buy scheme, boosted first time buyer activity during the past year.
Figures from the Banking & Payment Federation show that between January and September ‘18, 13,593 mortgages valued at €2,958 million were drawn down by first-time buyers. This is 1,436 more than the number drawn down in the first nine months of the previous year and represents an increased spend of €510 million.
For the full year in 2017 €3,556 million was drawn down by 17,408 first time buyers which gave an average drawdown of around €204,200.
So far, 4,345, almost a third of drawn down first-time buyer mortgages in ‘18, were for new homes with a value of €1,067.5 million. Figures aren’t available for the total number of mortgages for new homes in the first nine months in 2017, but the report for the third quarter of the year just ended does give a comparison.
It shows the drawdown by first-time buyers of €383 million for the purchase of 1,582 as being a 17% increase, year-on-year in volume terms and a 30.4% increase in value terms.
The third quarter was the busiest of the year so far, when a total of 5,247 first time buyers drew down €1,157 million.
Looking at the available figures for the year past, it can be seen that the average first-time buyer mortgage for new properties was around €245,600 while the one for second-hand properties was €204,400.
Auctioneers the Irish Examiner spoke to said that first time buyers, keen to avail of the Help to Buy scheme and who are also anxious to get an A-energy rated home, are willing to spend more on new homes.
Some of them observed that the overall increase in first-time buyer activity is also being driven by the increase in rent prices.
While the number of new houses becoming available has increased, (Sherry FitzGerald puts the increase at 31%) shortage of new stock is still a major issue and only a small number of auctioneers have new developments on their books.
Paul Hannon of Sherry FitzGerald in Cork estimates that he sold in the region of 100 new homes to first-time buyers in a variety of developments, including Kerry Pike, Crosshaven, Kinsale and Ballincollig.
"These included two-bed town houses at €240,000 and three-bed ones for €290,000 at Drakespool, Crosshaven, €310,000 and €315,000 for three-bed semis in Kerry Pike,” he says adding that some first-time buyers paid €340,000 for a three-bed semi in Kinsale.
In Carrigaline, auctioneer Dan Howard estimates that he has sold around 40 new houses to first-time buyers in the Astra Construction Janeville development, an 800 house development which started last year.
“We’ve had a lot of sales to people from Douglas and non-nationals working in technology companies,’’ says Mr Howard adding the three-bed semis for €310,00 and for €335,000 have been popular choices for first-time buyers.
The majority of his sales to first-time buyers are of new houses, he says that those who can’t afford new houses are buying second hand, typically spending between €270,000 and €290,000, Mr Howard has observed a very noticeable difference in the age profile of first-time buyers since the recession. “Ten years ago you had people in their 20s buying their first home – now they are mostly in their mid to late 30s.”
Glenn O’Connor of DNG Creedon says that the availability of new developments in Carrigaline and Crosshaven has resulted in a softening of prices of second-hand houses in Douglas area.
“Viewings of them have dropped and bidding on them isn’t as aggressive as it has been in the last few years,’’ he says, noting the first time buyers he has seen during the year have had an average spend of between €290,000 and €320,000.
In Limerick, Gillian Dunne of DNG Cusack Dunne reports that many first time buyers have been buying second-hand apartments in the €130,000/€140,000 price range while some are spending up to €250,000 on three-bed semis.
“A lot of the first time buyers have cash savings. Generally most are in long-term rental accommodation and nervous of rents increasing further. Also in parts, it is still cheaper from them to buy than rent,” says Ms Dunne.
Sherry FitzGerald Limerick has two new developments in Castletroy, where according to Ailbhe O’Malley, three-bed semis for €280,000 are proving popular with first-time buyers.
In Waterford John Rohan of Sherry FitzGerald Rohan in Waterford says that new houses have been in very short supply and that first-time buyers in the city are typically spending €160,000 and €170,000 buying second hand three-bed semis.
He is planning the launch of two new developments, his first in a long time. “But in January we will have €240,000 and €250,000 price range in Gracedieu and have another development with four-bed semis for €290,000 launching in February.’’
During 2019 the number of new homes becoming available is to rise. The Banking and Payments Federation expects the number of completed houses to reach 18,000 for 2018 and for the number to grow to 21,000 by end 2019.
In Cork Sherry FitzGerald plans to launch new developments in Glanmire (Ballinglanna) and Cobh early this year.
Mr Hannon pointed out that first-time buyer activity will be affected in 2019 if the Help to Buy scheme is not extended beyond December 2019.
Those planning to take the plunge in the New Year might take note of the fact that the most recent Banking and Payments Federation figures show a drop in both the number and value of the mortgage approvals for first time buyers in the month of September.
Some 1,782 mortgages for €385 million were approved – down from figures of 1,844 and €392 million in September 2017.
During the first nine months of 2018, a total of 16,600 mortgages were approved with a value of €3,699 million. The figures for the same period in 2017 were 16,692 and €3,459 million.
These figures show an increase in the average mortgage approval from €207,200 in 2017 to €222,000.