Budget 2017, a home buyer's story: ‘I really don’t want to end up in negative equity’

Susana Farinha has been looking to buy her first home since the new year. Incredibly, she hasn’t bid on one property yet as every time she rings to inquire about a house or apartment, she inevitably discovers that the property is already 20%-30% over its asking price.

Originally from Portugal and working in a senior position in one of Cork’s multinationals, she isn’t hell-bent on living in any one suburb, but still she is finding the Irish property market a nightmare. Susana was happy to see the budget’s help-to-buy scheme but she thinks it should have been offered on secondhand properties as well.

Under the scheme, first-time buyers can get a maximum of €20,000 (or 5% of a maximum house price of €400,000) back in tax relief that they can offset against their required deposit. To avail of the relief, the buyers will have to put down a 20% deposit. “It will be good to have that help but I wonder if it will make the supply increase? Will builders build more houses because of this as the problem is supply not demand?” she said.

She is disappointed it won’t be available for buying secondhand homes as it will “limit the housing market” for her.

Susana has been renting in Ballincollig, Co Cork, for the past year and for seven more years in Dublin before this.

“I keep an eye on what’s for sale on Blarney Rd, in Clogheen, Ballincollig, Blackrock, Douglas, Rochestown. However I’m open to any place with easy access to my office and where the buy is a good investment as I really don’t want to end up in negative equity,” she said.

She wanted to buy an apartment but gave up on that as she says the supply is limited and a single first-time buyer would have to stump up 75% of the cost under Central Bank rules.

She is aghast at the “short supply and high prices” dynamic in the Cork and Irish market. “If I was at home in Portugal, I would probably have bought a house or apartment within about eight weeks. But there is such short supply here and such demand. Any potential property that I have seen that is less than €300,000 needs serious refurbishment and that’s not an option for me.”

She thinks the Central Bank house purchase rules are a good idea, but says they are causing a lot of unintended problems. Susana needs a 10% deposit for any property up to €220,000 and 20% for any value beyond that. She’s well aware that the situation would much worse if she was in Dublin.

“For me, it would be a bigger problem if I lived in Dublin as I would have to come up with a higher deposit,” she said.

She also mentions a friend who has bene paying €1,200 a month in rent for the past five years yet can’t buy a property where her mortgage would be just €800 a month as she has only saved a 5% deposit. She needs 10% under the Central Bank rules.

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