Housing market becoming ‘harder to access’

More people face being shut out of the housing market in the face of rapidly rising property prices, amid warnings that its ‘help to buy’ budget scheme will only boost prices further.

Figures published by the CSO show property prices are continuing to rise and at an escalating rate. In the year to the end of September, residential property prices nationally rose 7.3% — a faster growth rate than the 4.2% in the 12-month period to September 2015.

While Dublin residential property prices rose 5.4% in the year to September, in the rest of the country in the same period they rose 11%. The figures come a week ahead of the Central Bank publishing a first review of the mortgage lending rules it imposed in February last year, and after the October Budget announcement of a new ‘help to buy’ scheme aimed at first-time buyers.

However, a number of analysts said they now expected house prices to forge ahead, with some claiming that the ‘help to buy’ plan will only push up prices further and make it even harder for people to get into home ownership at a time when rental costs are also soaring.

John McCartney, director of Research at Savills, said: “In the medium term, we are going to have higher prices that will make it harder for people to afford property.”

He said the ‘help to buy’ grants will be absorbed “straightaway”. Dr McCartney said he never believed the Central Bank rules on mortgage lending would curtail house price growth.

The bank will publish its first review of the rules next Wednesday, but Dr McCartney said they had already contributed to house prices rise via the “back door”, by pushing some people into the rental market, leading more investors to bid against each other for properties, thereby pushing up prices.

Alan McQuaid, chief economist at Merrion Capital, said the budget incentive aimed at helping first-time buyers to save for a deposit will work against the grain of Central Bank mortgage controls at a time of severe shortages, and will in time contribute to making homes even more unaffordable.

The CSO figures showed the average price of residential property sold in Dublin 4 in the year to the end of September was €653,772, and 37% of that stock was bought by non-occupiers.

In Galway, 35% of houses sold in the same period were bought by non-occupiers, with an average price of €211,426. In Kinsale, Co Cork, 23% of the properties were bought by non-occupiers, with an average cost of €372,993. On Cork’s southside 27% of properties sold were bought by non-occupiers and the average price paid was €263,109.

The Residential Property Price Index is 33.1% lower than its 2007 peak. However, since prices bottomed out in early 2013, prices nationally have risen 46.9%.


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