Number planning to buy hits record low
THE number of people who intend to buy a house has fallen to its lowest ever level as potential buyers fear the property price crash has not yet reached bottom.
Just 2pc of adults intend to buy a house this year, new research carried out by the State think tank, the Economic and Social Research Institute (ESRI) found.
This is the lowest level that house-buying intentions have been at since the ESRI started keeping records in 1996.
During the housing boom it was not unusual for up to 12pc of adults to express an interest in buying a house.
The figures on house-buying intentions were collected as part of the ESRI/KBC consumer confidence index but were not previously published.
Given the state of the jobs market, the State is unlikely to see any significant increase in demand for housing in the next two years, the ESRI's Dr David Duffy told an Irish Banking Federation conference on mortgages earlier this week.
The record low level of potential house buyers was despite the fact that house-price falls have made property affordable.
The latest EBS/DKM Housing Affordability Index, which measures the proportion of after-tax income a first-time buyer couple on an average income need to meet first-year mortgage repayments, has found this couple needs just 13pc of income to service a mortgage.
This is down from 26pc at the housing market peak in December 2006.
But the ability to borrow and the ability to repay a mortgage has deteriorated.
Dr Duffy also told the conference that the continuing collapse in house prices meant that an extra 70,000 homeowners had fallen into negative equity.
He now expects 270,000 homeowners to be in negative equity by the end of this year, up from his previous estimate of almost 200,000 mortgage holders. A total of 270,000 mortgage holders represents around a third of the mortgages outstanding.