Friday 28 April 2017

Cash buyers squeezing out 25-40 age group

House price increase
House price increase
Mark Keenan

Mark Keenan

In a reverse of the trend we've seen over the past few years, cash buyers are now increasing their share of deals in the Dublin market ahead of mortgaged buyers.

Options are now strictly limited as to what homes are affordable in the Greater Dublin Area (GDA) - which includes the traditional commuter counties of Kildare, Meath, Wicklow and Louth.

Cash buyers now account for 40pc of homes purchased throughout Ireland according to the statistics published today by the Irish Independent/REA Average House Price Survey.

But the ratio of cash buyers in the Dublin City market has risen for the first time in two years, from 33pc to 36pc, with some areas such as Dublin 6 and Dun Laoghaire registering a 25pc increase in cash purchasers in the past three months alone.

Under a 3.5 times income lending regime, a person earning €40,000 per annum is looking at a maximum loan of €140,000. But there are currently just two one-bedroom apartments listed in all of Dublin 1 available at or below that price today.

In the city and county area overall, cash buyers increased their share from 29pc in the last quarter to 31pc.

"Prices have gone up by an average of €5,000 in both of these areas over the past three months, but it is interesting to note that so many buyers are now cash purchasers," said Michael O'Connor, spokesman for the Real Estate Alliance.

Not surprisingly, REA members in the capital report that rents are continuing to increase, as more rental properties are brought to market and sold to owner occupiers - thus cutting choices and raising payments for couples who can now only dream of saving deposits.

With rent rising and non-cash buyers removed from the equation, the result has been a shift in power to sons and daughters of wealthy parents who will give them a generous "dig out".

The cash buyers are also investors coming from abroad in search of residential property to rent.

Rory Crerar of REA Orchard, who is based in Rathfarnham, said: "The 25-40 age group buyers were 70pc of our business up to about two years ago. Now we are not seeing them in many of our areas unless they are cash buyers - they tend to have to move out further afield to buy."

In Tallaght where affordable homes have traditionally been available, local agent Anthony McGee added: "First-time buyers have nearly given up hope of buying in this area and have accepted they will be renting for a long time under the current laws."

While less pronounced at the moment, the same problems are also emerging in other cities like Cork and Galway.

Michael O'Donoghue of REA O'Donoghue & Clarke in Cork City said: "It is hard to gauge in Cork due to lack of supply, however, we are seeing an affect in the lower age group profile 25-30 who are having difficulty raising money."

Irish Independent

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