First-time buyers still struggling

HOUSE prices are growing at the slowest rate in almost a decade, but first-time buyers are still struggling to get a foot on the property ladder.

A fifth of first-time house buyers are getting gifts of up to €15,000 from their parents to help build a deposit big enough to afford a home.

That’s according to a new report by the Economic and Social Research Institute (ESRI) and Permanent TSB.

It also revealed that many first-time buyers are paying more for their homes. While house prices nationally increased by 2.5% in the first half of the year, the price paid by first-time buyers was up 4.7%. Niall O’Grady, marketing manager with Permanent TSB, said changes in the last budget, which scrapped stamp duty charges for first-time buyers of second hand homes, has led to increased demand and pushed up prices.

First-time buyers are saving €23,000 on average as a deposit for a house. Those not lucky enough to have the financial support of their parents take four years to save their deposit. Most first-time buyers are having to take out longer mortgages, reflecting increasing values of property.

Overall prices are finally beginning to cool down. The average house now costs €260,000, €6,000 more than in January. However, the rate of growth in the first half of the year is much slower than it was in 2004 and the lowest since 1996.

The cost of a house in Dublin continues to be much higher than in the rest of the country. The average house in the capital is nearly €347,000, €122,000 more expensive than in the rest of the country. Prices around the country are beginning to catch up, with homes in the south east and the midlands rising at double-digit levels year-on-year.

Mr O’Grady said there was anecdotal evidence that the popularity of holiday homes was pushing up prices in these areas.

First-time buyers paid €230,000 on average in June, up by just over €7,000 on June 2004. For second-time purchases, the average price paid was €292,775, an increase of €15,000 since last year. With the cost of buying a house at an all-time high, the report found that nearly half of all homeowners believed their monthly mortgage repayments were “somewhat of a burden” on their finances.

The report also shows that since 1996, house prices across the country jumped in value by 240%, while in Dublin the increase over that period has been a staggering 300%.

It expects house prices to rise by 5% for the year as a whole and for an increase of the same amount next year, and forecasts 75,000 new homes to be built this year.

Permanent TSB expects just 5% of potential house buyers to seek one of its 100% mortgages, which launched recently.