Sunday 24 September 2017

Adjustment in house prices far from over

So Standard & Poor's reckons we've hit the end of the adjustment in house prices. I am unconvinced. The banks are returning to a more traditional set of lending values, and, as such, will be lending less and scrutinising their clients more.

The traditional lending sum for a mortgage is 2.5 times annual income, to a value of 80pc-90pc of the house value. According to the CSO, the average yearly wage in Ireland is about €33,600 before tax. This means that, on average, the bank will lend €84,000.

If you have 20pc of the purchase price, this gives you a price point of €105,000. This might get you a distressed apartment, but is unlikely to afford a decent house.

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