The struggle for first-time home buyers is laid bare
A FIRST-time buyer couple earning a combined €89,000 a year will struggle to be able to buy a new three-bed semidetached in most parts of the country, a new report shows.
In Dublin, Wicklow, Meath, and Kildare, the affordability gap is greatest, at about €62,000 between what they can borrow, plus their deposit and the purchase price and the shortfall they need to close the deal.
A new survey by the Society of Chartered Surveyors Ireland (SCSI) also shows that, even with combined gross earnings of €89,000, a couple in Dublin will fall €61,632 short, while in Cork that figure is €11,300, while it would be €22,000 in Galway.
However, the SCSI says estate agents are forecasting property prices will cool to just a 1% rise this year – which at the national average now of €382,500 would add less than €4,000 to the price. The latest official figures from late last year show prices were up just 2.3% last year.
Despite the marginal increase forecast this year, 63% of property agents surveyed believe property prices have either peaked and should start to decline or are close to peaking and will level off soon.
The number of landlords selling up has increased almost ten-fold, the SCSI reported. ‘On average 36% of residential sale instructions to agents in Q4 were landlords selling their investment property,’ it said.
SCSI’s John O’Sullivan said this shows investors and landlords are continuing to exit the market in ‘very significant numbers’.
‘After several years – during and immediately post-Covid – where the market experienced double-digit price increases, it looks now as if prices are set to consolidate for the medium term,’ the report says.
The market has also seen ‘a steady increase’ in the proportion of SCSI agents reporting that sales are not proceeding. More than a quarter – 27% – of agents said there had been an increase in the numbers of sales not proceeding.
Agents and surveyors reported ‘significant frustration’ with delays in the probate process and in contacting the probate office.
The homes market is also desperately short of properties for sale with 76% of agents reporting a shortage of supply – an increase of 10% on last year. Mr O’Sullivan said: ‘So, while price inflation has been dampened following the dramatic rise in interest rates, they have also been underpinned by the lack of supply. That said, prices are levelling off below current inflation rates and this is a welcome development for potential buyers.
‘While the current supply of new homes is undoubtedly insufficient, SCSI agents say initiatives aimed at increasing supply are kicking in and that the situation will improve in the coming years.
‘While this is most welcome, the skills shortage in the construction sector remains a critical issue which needs to be addressed.
He added: ‘Interestingly after supply, interest rates and the state of the economy, the fourth factor which members say will influence price movements is a potential change in Government and or housing policy.
‘We know there is going to be a new Government in the next 14 months or so and some members are clearly picking up on the need to build on progress to date and to avoid kneejerk policy shifts which could introduce uncertainty into the market.’
‘Avoid knee-jerk policy shifts’