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Chasm between values of new and second-hand houses

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Property search: Rents and mortgages are higher. Stock picture

Property search: Rents and mortgages are higher. Stock picture

Property search: Rents and mortgages are higher. Stock picture

A growing chasm between the values of new and second hand homes has been highlighted by the banking sector which says loans issued to first-time buyers for new properties are €52,000 higher than those drawn down for secondhand properties.

The average mortgage drawdown value for a first-time buyer acquiring a new property was just over €261,000 in the last quarter of 2019, compared with €209,000 for a second-hand property, according to a report by the Banking & Payments Federation Ireland (BPFI) which represents the banking and financial technology sector.

This contrasts with the situation during the boom when the average first-time buyer drawdown for a second-hand property tended to be much higher than that for a new property.

New home prices first exceeded second-hand values in 2015 and the gap has been widening steadily ever since.

Increasing land prices are to blame, now accounting for 55pc of the cost of a home.

However, surging labour and materials prices have also played a role, as has the increased quality of specification of new housing which is much higher than before the crash, with regulations introduced to enforce BER A ratings as standard.

Second-hand properties are becoming less attractive than new homes, especially because of their energy saving failings in comparison.

Irish Independent