Friday 24 November 2017

Average loan for first-time buyers down by 40pc from peak in 2008

Picture posed. Thinkstock
Picture posed. Thinkstock
Colm Kelpie

Colm Kelpie

THE average mortgage being taken out by first-time buyers has fallen by about 40pc since the start of 2008, figures show.

The average loan drawn down by homebuyers getting into the property market for the first time was €150,292 in the first three months of the year – a drop of 40.3pc on the €251,000 figure in the same period in 2008.

The figures were revealed in the latest affordability index from EBS and DKM economic consultants.

And despite the removal of mortgage interest relief at the end of last year, first-time buyers continue to be the main drivers of the mortgage market, accounting for 63pc of the number of new loans.

The index also showed that, as expected, it is considerably more affordable to fund a mortgage now than it was at the peak.

DKM director Annette Hughes said house affordability is likely to remain stable for the rest of the year.

"With reports emerging of an increase in activity amongst financially secure homeowners keen to trade up in the market, this is also good news for first-time buyers, who are required to complete the house purchase chain.

"Recently, a cautious optimism has been gaining momentum that the Irish property market has turned a corner in certain parts of the country. These locations tend to be the centres of major population with an active employment market where demand is recovering and rents are rising."

However, Ms Hughes said unemployment rates, mortgage arrears and negative equity are all issues that must be tackled to ensure any recovery can be sustained.

The affordability index found that the proportion of after-tax income to fund a mortgage was now at 13.9pc for a first-time buyer couple, compared with 26.4pc at the peak in 2008.

It remains substantially more expensive for single people, at 27.9pc.


Meanwhile, the number of new houses being built in urban areas around the country continues to grow, according to the Construction Industry Federation (CIF).

The number of new unit starts around the country increased by 0.4pc in the first five months of the year to 1,665 from 1,659 during the same period in 2012, according to the latest CIF housing statistics bulletin.

Dublin saw the greatest increase in numbers with 361 units started during the January to May 2013 period, an increase of 72 units or 25pc on the 2012 levels when 289 began construction.

CIF director of housing Hubert Fitzpatrick said that in most urban areas the supply is falling and this is creating strong demand for new stock.

"What is also noticeable is that the number of housing schemes is on the increase. This emphasises that more sustained house building is starting to take place, as opposed to recent years whereby one-off housing has been the only real source of activity," he said.

Irish Independent

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