Deadlines beckon for autumnal homebuyer
Published 09/09/2011 | 05:00
This autumn's housing market could be one of the most interesting since the downturn struck as home buyers will be faced with three key factors which encourage them to buy. The main factor may come from the fast approaching deadline on mortgage interest tax relief which may encourage some first-time buyers to buy before the end of the year.
In addition, some economists are forecasting that the European Central Bank will reverse its recent interest rate increases within the next 12 months.
A further factor may come from NAMA which promises to help get the market moving again by providing a guarantee to buyers against further falls in prices.
First-time buyers who complete their mortgage before the end of this year will still qualify for the maximum mortgage interest relief. So, for someone buying a €200,000 home with a €184,000 mortgage this would mean a saving of €152 per month until the end of 2012 with further, albeit lower, tax relief in the following five years.
In addition there's the stabilisation of interest rates with commentators expecting that the ECB will not increase rates for at least a year and some suggesting that they may even cut rates.
Unfortunately local banks may well increase their rates in order to reduce their losses and return to profits.
Of course the key incentive for home buyers is the improved affordability of homes and last week's Central Statistics Office house price index shows that national prices have fallen by 43pc and in Dublin by 49pc. Apartment buyers will benefit from even sharper price cuts as these have dropped by at least 54pc in Dublin.
Many observers reckon that the CSO is being conservative and that even sharper price cuts have been seen and a number of agents report cuts of more than 60pc. CSO does not publish house prices but the NAMAWinelake website estimates that currently the average national house price could be €180,700.
The average Dublin price is estimated at about €221,400 and the average price outside Dublin at €161,874. But then again, as the CSO argues, there's no such thing as an average house or an average house price.
There also seems to have been a pick-up in activity during July with buyers agreeing deals for keenly priced family houses in mature areas which appeal to families.
Recent auction results could be another factor encouraging activity. For instance, in the Stillorgan area of Dublin, after a family semi sold at Allsop's July auction for €285,000, five similar nearby houses sold within a few weeks by private treaty The five had been asking about €100,000 more than the auction price but presuambly the vendors settled for less. Unfortunately private treaty prices are not disclosed.
Simon Ensor of Sherry FitzGerald says another factor in recent summer sales activity has been the deadline that buyers set for themselves as they aim to move into their own home before the autumn.
Buyers Agent managing director Karen Mulvaney reports that she had bought 17 houses worth €20.7m for clients before the end of August this year compared to only 10 in the full 12 months of 2010.
"I suppose the increase is due to our success rate in obtaining high discounts (and it has been) easier to sale agree now with less buyers out there and pro-active estate agents," she said.
Dublin buyers may be disappointed that fewer than expected family houses now seem likely to come to auction this autumn as agents recognise that vendors can secure better prices through private treaty sales where most buyers have more time to check out the houses and secure bank finance. After all, purchasers are mainly first-time buyers and it takes so long for many of them to get bank approval for their purchases that they cannot meet the tight auction time table.
Likewise buyers in search of family houses in sought after areas cannot expect that NAMA to offer much assistance. NAMA is expected to confine its price guarantee to residential properties it is acquiring from developers. Most of these dwellings are likely to be apartments although they may include houses in regional towns around the country.
But many of the NAMA houses may be either unfinished or those purchased with an eye to assembling development sites and so are unlikely to be in the walk-in condition that most families would prefer.
Another factor influencing the market will be the Government's three-year financial plans due next month.These need to spell out clearly its plans to remove anyroad blocks affecting the market.