Cash deals for property rise sharply

THE number of cash transactions involving Irish property deals has risen sharply in the past year.

As a result of the increasing shift to cash deals, activity in the property sector may be under-estimated by as much as 15%, a new report said.

Carol Tallon, a founder director of Buyers Broker said 15% of property deals done through its offices since February have been for cash, marking a significant rise in the cash end of the market.

Despite negative market sentiment, between “20,000 to 22,000 mortgaged sales to date is not an inactive market and it further means that we are on target to achieve 35,000-40,000 new units this year”, she said.

House prices are down almost 12% in the year and she warned buyers “to ensure” they did not pay over the odds as prices continue to fall.

AIB Global Markets, in a separate review, is still pessimistic about themarket and expects to see no more than 25,000 new homes to be built this year.

Data from the Central Bank shows the market remains well down with just 12,262 units completed in the first five months, 48% off the 2009 figure, it says in its August 2009, housing market bulletin.

Concerns about housing market prospects, depressed consumer confidence are all seen as contributing to lower mortgage demand, said AIB.

While affordability may have improved, the most recent Central Bank lending survey highlighted the increased difficulties facing first time buyers as banks restrict what they are prepared to lend against property values, AIB said.

Further evidence of the depressed housing market is reflected in the 64% fall in stamp duty receipts to the end of July, having declined by 48% in 2008.

The latest Irish Banking Federation data also demonstrates a market in steep decline with a 61% year on year fall in the number of mortgage drawdowns in Q1 2009.