First-time buyers are drawing down mortgages at a level not seen since the boom

One difference observed during the year was an increase in the number of FTBs purchasing second-hand apartments coming on the market due to the exodus of landlords

Undeterred by interest rate hikes and house price increases, first-time buyers (FTBs) have dominated the mortgage market in 2023 — drawing down mortgages at a level not seen since the boom.

The most recent Banking & Payment Federation Ireland report reveals that FTBs have been drawing down 470 mortgages, valued at €131m per week, since the start of the year.

Figures for the third quarter show FTBs borrowing €1.943bn for the purchase of 7,011 houses, and accounting for 80% of home mortgage drawdowns on new properties, and 69% of home mortgage drawdowns on second-hand houses.

The third quarter report shows €1.311bn being drawn down by FTBs for mortgages on second hand properties and, according to the BPFI, this is the first time since the records started in 2005 that the figure has gone above €1.3bn.

Figures for all three quarters of the year show that FTBs borrowed €5.117bn to purchase 18,324 properties.

This is an increase on the same period last year, when FTB borrowing was €461m less and 563 fewer mortgages were drawn down.

The BPFI figures show that over the first nine months of this year, FTBs borrowed €1.845bn to buy 5,836 new houses and €3.27bn to buy 12,487 second-hand ones. This puts the average borrowing for a new house at €316,000 (up from €286,000 for the same period in 2022), while the average drawdown for a second-hand house was €261,000 (up from €250,000 last year). During the same nine month period last year, FTBS drew down mortgages valued €1.62bn to buy 5,657 new houses and €3.035m to buy 12,104 second-hand ones.

Auctioneers the Irish Examiner spoke to said that — as in previous years — lack of supply, especially of new homes, has continued to be a major obstacle to the path of ownership for first-time house-hunters.

One difference they observed during the year was an increase in the number of FTBs purchasing second-hand apartments — many of which were former rental properties coming on the market due to the exodus of landlords. Kevin Barry, of Barry auctioneers, says that the sale of second hand apartments accounted for 12% of company sales this year.

“Last year 60% of the apartments we sold were bought by FTBs — this year the figure went up to 72%,” he says, adding that many of the apartments coming on his books during the year were being sold by landlords in rent pressure zones.

“For a second-hand two-bed apartment, FTBs were typically paying €260,000. Although the spend in Douglas and Rochestown was higher, at €280,000,’ he adds.

Mr Barry says that overall FTBs accounted for 38% of his sales this year — up 8% on last year.

He says the typical spend on a three-bed semi by a first-time buyer was €350,000, but points out that second-hand three-bed semis have become less affordable.

“Mostly, it’s about buying whatever a first-time buyer can afford and what they can get mortgage approval for,” he says, adding that the key motivation for buyers is the high price of renting.

Mark Gosling, of Behan Irwin & Gosling, also noted an increase in second-hand apartment sales — especially to first-time buyers.

“Typical prices for a second-hand two-bed apartment were between €250,000 and €275,000, depending on the area,” he says.

“Our sales to first-time buyers this year were in excess of 50%,” he says, adding that the typical FTB spend was between €350,000 and €400,000.

At the new homes division of Sherry FitzGerald in Cork, which has more new developments on its books than most other auctioneers in the city, there have been a high number of sales to FTBs.

“We had approximately 210 FTB sales this year — which is on par with previous years, since they have consistently made up two thirds of our buyers” auctioneer Rachael O’Leary says.

“Ballinglanna, in Glanmire, was our busiest development this year — with over 90 sales,” she says, adding that recent prices for properties there started at €320,000 for a two-bed townhouse.

Sherry FitzGerald Cork New Homes’ plans for 2024 include the launch of a new 280 unit development at Arderrow, Ballyvolane three km from the city centre.

“This is our main new development, and this will see 80 units coming on the market in 2024. It will include two-, three-, and four-bed town houses, as well as three-bed semis — which will appeal to FTBS,” Ms O’Leary says.

At Savills in Cork, FTBs accounted for 80% of new home sales this year — according to auctioneer Elizabeth Hegarty. She noted that the active price bracket tended to be between €300,000 and €400,000.

Mostly, it’s about buying whatever a first-time buyer can afford and what they can get mortgage approval for ... a key motivation is the high price of rent