One in five with mortgage approval failing to secure a home due to excess demand

One in five with mortgage approval failing to secure a home due to excess demand

That chimes with the findings of another report, this time by Threshold, which showed that two-thirds of people are renting because they cannot afford a home. Picture: iStock

One in five homebuyers with mortgage approval are currently failing to secure a property each year due to excess demand.

That is according to the latest quarterly report by Myhome.ie and Davy Stockbrokers, Conall MacCoille.

The Myhome.ie report finds annual asking price inflation has slowed to 10.9% nationwide. It was 7.9% in Dublin and 12.7% elsewhere around the country.

Quarterly asking price inflation was 5.3% nationally, 3.4% in Dublin, and 6.1% elsewhere around the country.

National

€320,000

+5.3%

+10.9%

Dublin

€403,000

+3.4%

+7.9%

Ex-Dublin

€270,000

+6.1%

+12.7%

The authors say that paints the picture of regional asking prices fuelling the headline figure and this substantial rise in the quarterly rate is not unusual ahead of the busy summer trading season.

The report does indicate that cost of living concerns and rising interest rates are set to cool soaring demand for property in the second half of the year, with an increase in the number of available properties for sale on MyHome.ie in June, and more transactions and quicker sales in the first half of the year, but with rents climbing by 11.2% in the year to May, still well above pre-pandemic levels.

That chimes with the findings of another report, this time by Threshold, which showed that two-thirds of people are renting because they cannot afford a home. 

The Generation Rent report also showed that just 14% of those surveyed are renting by choice and that 54% of respondents said they expect they will still be renting in 2027 - when the next Census is scheduled to take place.

Almost two-thirds of the respondents to the survey were 35 or older and Threshold CEO John Mark McCafferty said it is "essential that small scale landlords are kept in the market", through measures including applying a lower tax rate on rental income generated from properties subject to long-term lease agreements for 10, 15 or more than 20 years.

In the Myhome.ie/Davy report Davy chief economist Conall MacCoille said 2022 should be a year of two halves, with price inflation slowing down in the second half of the year. 

“Double-digit inflation and sharp price gains are set to give way to greater concerns on affordability, the economic outlook and the impact of the ECB raising interest rates," he said.

He also said that even though the slowdown has been marginal this quarter, anecdotal evidence from estate agents suggests that the momentum driving asking price inflation earlier in the year, is starting to slow.

“However, we are unlikely to see a repeat of the Celtic tiger era - as mortgage lending rules have kept the market in check. The expected rise in interest rates from the ECB, while notable, will also not have the same negative effect given the Irish market is well insulated at present.”

The Myhome.ie report finds annual asking price inflation has slowed to 10.9% nationwide. It was 7.9% in Dublin and 12.7% elsewhere around the country. Picture: Denis Minihane
The Myhome.ie report finds annual asking price inflation has slowed to 10.9% nationwide. It was 7.9% in Dublin and 12.7% elsewhere around the country. Picture: Denis Minihane

He said the average mortgage approval rate was now €283,700 – which is above Celtic tiger levels for the first time – but the excess demand in the market means that effectively 20% of homebuyers with mortgage approval are currently failing to secure a property each year.

“The possibility of a modest fall in Irish house prices can’t be ruled out, correcting some of the froth built-up since the beginning of the pandemic. However, double-digit declines or a repeat of the Celtic Tiger era housing crash seems very unlikely. This is because the Central Bank of Ireland (CBI) rules have stopped homebuyers taking on too much debt.”

Population reaches highest level since Famine

The census results yesterday showed the country's population level is at its highest point since Famine times - but the issue of property remains a serious issue with experts claiming demographic changes highlighted in Census 2022 demand action, particularly on vacant dwellings.

There is now more than 5.1m people living in the country, a rise of 7.6% since Census 2016, with every county seeing an increase.

But just one county - Kildare - saw a rise in its housing stock that kept pace with population growth, and while the number of vacant dwellings, excluding holiday homes, fell to 166,752, the extent of the housing crisis swiftly turned the focus on why those properties were lying empty.

Cormac Halpin, senior statistician in the Census Division, said the data did not capture how many of the vacant rental properties were short-term rentals, such as Airbnb.

Rory Hearn, Assistant Professor of Social Policy at Maynooth University, tweeted that while Census 2022 showed there were 166,752 vacant properties including 35,000 vacant rentals, daft.ie was currently listing just 810 properties to rent.

"These properties should be brought into use immediately," he said, advocating a vacant homes tax with 'use it or lose it' fines.

Mike Allen, Head of Advocacy at Focus Ireland, said a system where property owners had to provide information as to why a property was vacant could help ease the housing burden, and he said the latest Census data had to be "a spur" for action.

"It is a reminder of the scale of unexplained dereliction and vacancy in Ireland," he said, noting Census 2022 was the second consecutive Census in which the rate of population growth outstripped the rate of increase in housing stock.

Mr Allen also said the Census data did not include boarded-up or derelict properties, many of which were located in urban areas and - while costly to renovate - would still prove cheaper than building new units on the edges of towns.

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