First-time buyers find homes are more affordable

HOUSES are more affordable now than at any time in the last quarter of a century with first-time buyers accounting for a third of the mortgage lending sector.

According to the latest EBS/DKM affordability index an average first-time buyer working couple is paying 13.4% of their joint income to service their mortgage compared with 26% in December 2006.

Low interest rates and 2003 level house prices have resulted in record highs in housing affordability, according to the index.

The first-time buyer sector was the only one to experience growth last year with market increases in both final quarters.

In the third quarter of 2009 the first-time buyer sector represented 35.6% of all mortgage lending – the highest percentage in recent history.

Director of membership business with EBS, Dara Deering, said: “The market for first-time buyers is becoming increasingly attractive; over the past three years, property prices have decreased by almost 27%. This equates to €83,000 for properties nationally and €137,000 for properties in Dublin.

“First-time buyers considering entering the market over the coming 12 months should expect to see this contraction continue, albeit at a slower rate than last year.”

EBS said it has grown its share of the retail mortgage market to 21.7%, while its share of the overall market has grown to 17.8%, a 6.4% increase over this time last year.

Its share in the first-time buyer market has grown to 38.4% in the retail mortgage market and to 24.7% in the market overall.

Director with DKM economic consultants, Annette Hughes, said: “Negative equity is a problem for many FTB buyers who purchased over the past five years and consumer confidence remains in low territory.”