First-time buyers to drive market growth countrywide in 2017
Published 09/01/2017 | 02:30
First-time buyers will drive Ireland's property market in 2017 with the highest city price increases of 10pc predicted for Galway and Limerick.
Agents expect a 6pc rise nationally, driven largely by new demand from first timers who are expected to be most active where new homes are available.
That is thanks to the easing of the Central Bank's restrictions on mortgage deposit lending and the Help to Buy scheme.
A survey carried out for the Irish Independent by the Real Estate Alliance Group (REA) has found that agents throughout the country expect prices in the capital to outstrip the national average, with a 7pc rise expected in Dublin.
Surging rents, a lack of suitable supply and the punitive mortgage deposit rules for first and second-time buyers had combined to put the Dublin property market into reverse through the start of 2016.
However, an increase in mortgage-approved buyers and the recent easing of the Central Bank's deposit restrictions has seen first-time buyers return to viewings.
This, combined with a shortage of suitable supply, has caused prices to rise again, and REA agents in the capital are predicting that the outlook is bright for the new year, at least in the lower end of the market.
However, there is less appreciation anticipated in the upper ends of the family home scale - as serious issues around the income multiplier and the deposit rates put the brakes on many second-time buyers trading up.
Agents in the three main cities outside Dublin are optimistic about 2017, with rises of 10pc predicted in Limerick and Galway.
Cork is looking at a 5pc increase.
The outlook for the commuter areas surrounding the capital is quite cautious, with counties around Dublin predicting a rise of 3.8pc on average and many agents fearing that the market there has hit its height under the current financial regime.
Agents in Meath are predicting just a 1.8pc change, with some areas such as Navan and Kells forecasting that there will be no movement due to a lack of new development.
There was minimal growth in the final quarter of 2016 in Wicklow.
However, agents are confident that the market will react positively to a series of significant upcoming new developments adjacent to the N11 including Kilcoole, Rathnew, Arklow and Wicklow Town.
Prices in Kildare were stagnant in the REA's Q4 Average House Price Survey. But agents are predicting that the Government's Help to Buy scheme and the easing of the Central Bank restrictions will combine to produce a 3.5pc increase in the coming year.
"The easing of the Central Bank restrictions has given the market great short-term hope, but the real problem in the property lies in supply," REA chairman Eamonn Spratt said.
"We are bringing people into the market, but we have no long-term plan to provide the suitable housing that they need around the country.
"The fact remains that builders will not create developments unless those properties can be sold for more than €200,000.
"Until that point, unless there is state intervention on supply financing, we will not see sustainable building in areas where the average is below that point."
He said that Longford prices had risen an incredible 41pc during 2016 and prices were predicted to rise by a further 15pc this year.
"However, the price of the average house in Longford town is just €78,000 and will reach €90,000 by the end of 2017 simply because the oversupply on the market has now sold and there are no new developments on the horizon," he said.
Double digit rises of 10pc are also being predicted for the same reason in Roscommon, Monaghan, Cavan, Galway County and Kilkenny.
But the lack of building opportunity could hurt future economic development in lower-priced counties, as the example of Carrick-Shannon in Leitrim shows.
Local agents report that employment is growing in the town and that there will be a shortage of suitable properties until 2018 at the earliest.