First-time buyers are being 'muscled out' by those paying cash
Published 22/09/2016 | 02:30
First-time buyers are being squeezed out of the housing market, while cash purchasers and investors are muscling in.
Half of the market was made up of first-time buyers of homes and apartments just six years ago. But by last year, the proportion of new buyers was down to a quarter of all buyers, new CSO figures show.
The revelation is likely to increase pressure on the Government to keep its promise to introduce a help-to-buy scheme for new buyers in next month's Budget.
In the first seven months of this year, first-time purchasers accounted for 25pc of buyers, according to a revamped index of property prices from the Central Statistics Office. In 2010, it was as high as 53pc.
The new property price index includes cash purchases of residential properties for the first time and not just details based on mortgage draw-downs.
Dermot O'Leary, an economist with Goodbody Stockbrokers, said the majority of cash purchasers were investors or corporate buyers. They now represented a large part of the market, Mr O'Leary said.
"We estimate that this grouping accounted for 34pc of purchases over the most recent period," he said.
Launching a revised property price index, the CSO said those buying with cash tended to pay less for properties.
Housing experts said this was because sellers tend to be anxious to complete a sale quickly and will take a lower amount if the buyer has cash.
This means those who can buy without a mortgage are likely to be muscling out those who need a mortgage to buy, particularly new buyers.
CSO statistician Gregg Patrick said: "What we can say is that cash buyers pay less for properties than people buying with a mortgage."
Prices rose by 6.7pc in the year to July, after rising by 2.5pc in the month. The national average house price in 2015 was €236,000 but there were massive regional variations.
Prices are recovering fast in the Midlands, with a rise of almost 20pc on the last year.
In Dublin, prices were up by close to 4pc. In the West, prices rose by close to 11pc, with a surge of 15pc in the last year in the southeast.
In the border area, prices were up 12.4pc in the last year.
The figures indicate that the most expensive houses in the State are in Dublin 6, which includes Dartry and Rathgar, with an average price of €694,000 this year.
Castlerea in Roscommon had the cheapest properties at an average price of €72,300.
Changes to the property price index, to include cash prices, mean the CSO now says the collapse in prices was more severe than previously calculated.
The figures show the fall from the high to the low was 54.4pc, and not 50.9pc as had previously been recorded.