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Calls for easing of Central Bank mortgage-lending rules as house prices in Dublin stabilise


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Central Bank lending rules for mortgages should be reviewed and eased to enable first-time buyers to become homeowners, DNG chief executive Keith Lowe has said.

It comes as the price of second-hand homes in the capital stabilised in the third quarter of 2021, according to DNG’s market review.

Prices for second-hand homes rose by 2.1pc in Dublin in the three months to the end of September. This is down from the 3pc increases in Q1 and Q2 of 2021.

Despite this apparent easing, the average resale price of a property in Dublin is now €492,531, compared to €452,644 at the end of September 2020.

Mr Lowe said affordability still remained the key issue around access for prospective first-time buyers and this was why Central Bank lending rules needed to be reviewed and eased, “to help buyers to the greatest degree possible”. These rules were introduced to prevent people from borrowing beyond their means following the last financial crash in 2008.

“The acceleration in property prices we saw from June 2020 until June this year was unsustainable, and it is good to see that the rate of price inflation eased somewhat in the three months to the end of September,” Mr Lowe said.

“However, with prices still increasing, albeit at a marginally lower rate, affordability remains the key issue in the Dublin residential market and to this end, we believe that the Central Bank macroprudential lending rules need to be reviewed and eased to help buyers to the greatest degree possible.

“It is still the case that many would-be first-time buyers who are currently renting would pay less per month on a mortgage than they currently pay in rent for the same property.

“Not only would this promote home ownership in line with the Government’s Housing For All action plan, but it would also free up desperately needed accommodation in the private rented sector,” Mr Lowe said.

The report highlights the average price of a second-hand home in Dublin rose by 8.8pc in the past 12 months, down marginally on the high of 9.4pc recorded in the year to June 2021.

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An analysis of data from Myhome.ie reveals there were 6pc more homes for sale at the end of September compared to the end of June offering more choice to buyers. However, the “continued imbalance between demand and supply” in the market resulted in positive price inflation during the third quarter.

Recent mortgage market data from the Banking and Payments Federation Ireland shows that in August, mortgage approvals rose 5.9pc in volume terms compared to a year earlier indicating a “robust pipeline” of demand in the market.

DNG director of research, Paul Murgatroyd, said: “The latest results of the DNG House Price Gauge indicate that the rate of growth in residential property prices is stabilising and the impact of Covid-19 on the market is showing signs of unwinding following 18 months of volatility, with a lower rate of price growth and a small improvement in supply both evident during the third quarter this year.”

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