2022 a strong year for first-time buyers
Starter Homes collage
DESPITE supply shortages, inflation, interest rate increases, a cost of living crisis and war in the Ukraine, first time buyers (FTBs) managed, in the first nine months of the year, to buy 2,100 more homes and borrow €957 million more than they did in the same period last year.
Banking & Payments Federation Ireland figures show that between January and September, FTBs borrowed €4,656 million for the purchase of 17,761 properties. Some 12,104 of these were second hand while 5,657 of them were new, which is 1,171 more second-hand units and 929 more new homes than in the same period last year.
During the first three quarters of the year, FTB borrowing was €1,620 million for new houses and €3,035 million for second-hand properties.
The average drawdown for a new property was €286,000, up from €251,000 for the same period in 2021, while the average for secondhand homes was €250,000, up from €230,000. BPFI reported high levels of FTB activity in the third quarter. “The volume and value of FTB mortgages on new properties rose by 14.7 % and 33.5% respectively,” they said.
Noting that the Q3 value of FTB mortgages for second hand properties reached €1,151 million, the report states that this is the highest quarterly value seen since split records for new and second hand properties were introduced in 2005.
According to the BPFI, FTBs accounted for 78.2 % of the value of home mortgages on new properties in Q3. The report notes that this is the 13th successive quarter in which FTBs accounted for over 70% of home mortgages on new properties - a figure not achieved between 2005 and 2008 when the FTB share of new home mortgages didn’t exceed 55%.
Sherry Fitzgerald New Homes in Cork has reported a high level of FTB purchasing. Auctioneer Rachel O’Leary says that 80% of the 200 new houses they sold in Cork during the year went to FTBs, up from 75% last year.
Estimating that the average FTB spend was in the region of €380,000, she says that in some of the more active developments, the FTB purchase level was even higher than 80%.
“At Harbour Heights, Rochestown Road – 94% of buyers this year were FTBs and the average price they paid was €380,000. At Abbey Fort, Kinsale – 83% were FTBs and the average price was €400,000. At Ballinglanna, Glanmire – 82% of buyers were FTBs and the average price paid was €390,000.”
Ms O’Leary says the highest volume of sales was in Ballinglanna, one of the largest developments in the county.“ We sold approximately 80 houses there this year and are planning for the release of another 120 in 2023,’’ she reveals.
Another new release is scheduled in Ballinglanna for February and one is also planned early in the year at Harbour Heights, Rochestown, where 40 properties sold this year.
Savills New Homes in Cork had 20 launches in 12 developments around the county with around 80% of sales going to FTBs. “ It was a busy year and the launches sold out quickly – sometimes within a week,’ reveals auctioneer Kate Buttimer.
She says FTBs are now availing of the newly introduced First Home Scheme in addition to the Help to Buy scheme.
“The announcement by the government of the new rule allowing first time buyers to borrow up to four times their gross income has given a boost to sales in recent weeks,'' she adds.
While little new stock remains, Savills are planning six new releases in the first quarter of 2023 which will include properties in Carrigtwohill, Ballincollig, Kinsale, Mallow, Whitechurch and Kerry Pike, which are likely to attract FTBs.
Because of the shortage of supply of new homes, first time buyers are – as shown by the BPFI figures - buying high levels of second hand homes.
Michael Downey of ERA Downey McCarthy believes that FTB demand is being fuelled by high rental prices and says he has seen sales of second hand properties to first time buyers go up 20% on last year.
“It is now cheaper to buy than to rent – you can pay €2,000 a month to rent a three bed semi but you can get a mortgage on one for less.”
He says that FTBs purchasing second hand are typically spending between €320,000 or €330,000 but that some are going as high as €400,000 for properties on the south side of Cork city.
“Demand is particularly high in established residential areas such as Ballinlough, Douglas, Bishopstown, Wilton and Glasheen.”
Mr Downey says that between April and June he witnessed a buying frenzy.
“It was at Celtic Tiger levels and first time buyers were leading the charge - we saw properties going for €50,000, €60,000 and €70,000 above their guide prices, with first time buyers bidding against each other.’’ Sales started strong – slowed in February due to the war in the Ukraine -but resumed again in April, reveals Mr Downey, estimating that prices rose by 10% in the first six months.
He says that in the second half of the year, FTBs became more cautious, while sales picked up noticeably at the end of the year.
“We saw a lot of first time buyers who were determined to buy a home for Christmas,” Mr Downey said.
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