So, is it finally a good time to buy?
Published 16/04/2011 | 05:00
SO, is the time finally right to buy property?
The success of the Allsop Space auction at the Shelbourne Hotel in Dublin yesterday suggests that the housing market could be at -- or close to -- bottom, with the prices achieved averaging approximately 55pc of what similar properties sold for at the peak of the market.
Most of the properties on offer yesterday were suited to cash-rich investors rather than families or first-time buyers.
Those seeking a roof over their heads need the support of banks, and this has not been forthcoming for many buyers.
"Banks need to get behind buyers and support them when buying at auction," buyers broker Carol Tallon said yesterday.
Some bank employees, as well as estate agents and construction workers, are now being refused mortgages because banks consider them too risky.
So it's only first-time buyers in relatively secure jobs who can get bank backing.
However, banks take so long to approve mortgage applications that the auction process -- which takes about six weeks from launch to sales -- is too quick for them as things stand.
If this continues to be the case then cash buyers will continue to dominate auctions.
And it remains to be seen how big their pockets are, and how many of them there are in the Irish market.
As NAMA comes under pressure to get rid of properties on its books, it expects it will have to give funds to the banks to encourage them to lend.
Banks will also have to get permission to change the restrictions they apply to home buyers, especially terms such as the amounts they allow buyers to borrow as a percentage of their salaries.
Even more importantly, buyers need assurance that the Government will stabilise the economy so that buyers are not afraid to buy, or afraid they will lose their jobs and can't afford to pay the mortgage. For those who can afford to buy, houses are more affordable than they have been for almost five years.
This auction may encourage buyers who can afford to buy to get off the fence.
But they also need to realise that it is unrealistic to expect to buy a Taj Mahal-style house for the price of a tent.