Capital’s homes out of reach for first-time buyers
Combined salary of €90k still won’t buy a new property
A NURSE and garda on a combined salary just shy of €90k cannot afford to buy a home in the Greater Dublin area – as prices for a new three-bed semi-detached reach €464k.
This comes as around a third of all property sales are small landlords exiting the markets, selling their investment property.
And according to the Society of Chartered Surveyors Ireland, new homes remain out of reach for potential buyers by tens of thousands of euro.
The affordability gap for these first-time buyers in Dublin, Wicklow, Meath, and Kildare is just under €62,000 while the gap in Galway is €22,000.
While the most affordable regions for first–time buyers are the North-west, Midlands and the South-east.
A new survey by the Society of Chartered Surveyors Ireland indicates residential property prices will continue to stabilise in the medium term with estate agents forecasting an increase of just 1% in 2024. Almost two out of three respondents (63%) believe property prices have either peaked and should start to decline or are close to peaking and will level off soon.
The report found the main factors influencing expectations of house price movements are the supply of housing, interest rates and changes in the economy.
“Right now, new housing is most viable in the Greater Dublin Area, and this is where it’s most unaffordable,” John O’sullivan, Chair of the SCSI’S Practice and Policy Committee said.
“In very many cases the areas where new home building is least viable are the more affordable areas, such as the Midlands and North-west.
“To restore balance to the property market we need to ensure there is an adequate delivery of new housing through other avenues such as AHBS, via the Land Development Agency and through direct public housing delivery.”
Mr O’sullivan said it looks now as if prices are set to consolidate for the medium term.
He added: “SCSI agents believe we will see modest growth in values in what will most likely be another challenging year for the property market.
“Three out of four agents or 76% of respondents are reporting a lack of supply to meet demand, that’s up 10% on last year.
“So, while price inflation has been dampened following the dramatic rise in interest rates, they have also been underpinned by the lack of supply.”
He said prices are levelling off below current inflation rates which is a welcome development for potential buyers as their purchasing power will increase as affordability improves.
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.
“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,” Mr O’sullivan said.
“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 knee jerk policy shifts which could introduce uncertainty into the market.”
The SCSI’S Annual Residential Review and Outlook report also found that one in three of properties that are coming on the market are buy-to-lets.
On average 36% of residential sale instructions to agents in Q4 were landlords selling their investment property.
While this is down 4% from last year, Mr O’sullivan said it shows investors and landlords are continuing to exit the market in very significant numbers.
And with mortgage approvals for residential investment lettings down 20% year on year, the SCSI say it’s clear those leaving are not being replaced in the same numbers by new investors.
Mr O’sullivan said: “This in turn is going to affect the number and choice of rental units available on the market.”
“It will also contribute to some cases of higher rents.”