Life Homes

Wednesday 24 September 2014

More than half of house buyers 'are willing to spend up to €350,000'

Charlie Weston Personal Finance Editor

Published 21/05/2014 | 02:30

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British house prices rise by 8.5% in April
British house prices rise by 8.5% in April

MORE than half of potential home purchasers have a budget of up to €350,000 to spend, as an urgency to buy has gripped house hunters.

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Three out of four people who responded to a survey said they were preparing to purchase in the next six months, despite the lack of suitable housing in urban areas. And six out of 10 want-to-be buyers have a budget of up to €350,000, the survey commissioned by AIB shows.

This is almost twice the average mortgage for a first-time buyer this year of €165,909, according to separate Irish Banking Federation figures.

The new survey shows that less than a third of the respondents have a budget of between €350,000 and €549,000.

The house hunters’ budget includes both their deposit and the mortgage they will draw down. But it is not known how many of those surveyed have already obtained full mortgage approval.

Home buyers are facing a shortage of family homes, rising prices and banks that are only lending to those with the best prospects. Prices shot up by 14pc in Dublin last year alone.

Despite this, 74pc of potential buyers want to own their own home before the end of the year, according to the research, which was carried out for AIB by estate agency Sherry FitzGerald.

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Another 18pc are hoping to buy within the next 12 months, according to the research among 1,600 potential buyers who are on a Sherry FitzGerald database who responded to a questionnaire. Most of those who replied were in Dublin.

Sherry FitzGerald said it was “clear that not only has the level of demand increased, but so too has the urgency to buy”.

Some housing experts have advised potential buyers to wait for another 18 months to two years before buying, a time when it is expected that builders will have completed new homes.

But a lack of suitable housing is proving to be a massive |stumbling block for the next generation of house owners.

Most potential first-time buyers are living in rented accommodation, while another 16pc are living with a relative.

Want-to-be buyers are eager to secure a two- or three-bedroom house, with 22pc seeking a four-bed home.

The survey also found evidence that people who already own a property want to trade up. Around a quarter of potential purchasers in both Dublin and Cork are people who want to move to a bigger home.

And investors are still seeing value in the market. In Limerick, 16pc of the respondents indicated that they were investors.

This rose to 19pc in Galway, falling to 11pc in Cork and 9pc in Dublin, the AIB/Sherry FitzGerald survey found.

Property Industry Ireland (PII), the IBEC group that represents the construction and property industry, said a number of issues were now holding back house building.

These include the availability of suitable sites for development, planning challenges and the availability of development financing, particularly equity financing.

Director of PII Peter Stafford said: “If we can reduce costs and remedy delays in the pre-construction stages of development, especially in planning, a greater number of properties can be brought on to the market. “This will help keep price inflation down and ensure that consumers have a choice of high-quality housing in the places where they wish to live.”

The latest figures from the Central Statistics Office show that residential property prices increased nearly 8pc in the year to March, with Dublin property on average costing 14.3pc more than a year ago.

The CSO figures indicate that house prices are stabilising somewhat.

Nationally, property prices fell by 0.7pc in the month of March and prices in Dublin remained unchanged.

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