Sunday 25 August 2019

How cash-rich investors have become the latest challenge for first-time buyers

Investors have bought more homes than first-time buyers in almost half of all markets. GETTY
Investors have bought more homes than first-time buyers in almost half of all markets. GETTY
Paul Melia

Paul Melia

Investors are dominating house purchases and squeezing first-time buyers out of key markets as prices continue to rise.

Investors have bought more homes than first-time buyers in almost half of all markets, or 62 from 128, an analysis of data from the Central Statistics Office (CSO) showed.

While the overall figures suggested first-time buyers and existing owners purchased the bulk of all homes sold, they masked the fact cash-rich investors were buying in areas of highest demand where shortage of properties was resulting in rocketing rents and rising prices.

Among the markets targeted were Galway City, Limerick City, Dublin 1, 2, 4, 6 and 8, Waterford city, Cork city and the Co Cork commuter towns of Mallow, Kinsale and Bandon.

In some markets, investors snapped up more homes than all owner-occupiers combined.

These areas included Dublin 2, Cootehill in Co Cavan, Clifden in Co Galway, Charleville in Co Cork and Kilrush in Co Clare.

The figures will add to pressure on the Government, which is grappling with a slow increase in delivery of new homes, coupled with political controversy over rising house prices and soaring rents which are now at boom-time levels.

The latest figures from the Department of Housing, which covered the period to the end of October this year, showed that 11,797 houses and apartments have been built in 2016.

By year-end, they were expected to reach between 15,000 and 17,000 - still below the 25,000 needed to meet demand.

The most recent figures from the Residential Tenancies Board showed the cost of renting a home was 8.6pc higher today than a year ago.

The analysis was made possible after the CSO began providing a detailed breakdown of purchasers as part of its house prices data series.

It breaks them down into first-time buyer owner-occupier, former owner-occupier - or those moving to a different property - and non-occupier, or investor.

The purchaser type is broken down into 128 discrete markets, and the figures showed that investors were more dominant than throughout 2015, and were snapping up homes which could be available for owner occupiers.

The figures showed:

There were more investors than first-time buyers purchasing in 62 of the 128 markets analysed. This compared with 59 last year.

Overall, across 19 of the 26 counties, investors were more active in the market than first-time buyers. Investors purchased almost twice as many homes as first-time buyers in Cavan, Donegal, Leitrim, Sligo and Waterford.

For new-builds, investors were purchasing more homes than first-time buyers in 20 of the 128 markets. This compared with 37 last year.

These areas were Galway city, Waterford city, Kilkenny, Dublin 1, 2, 4, 6, 8 and 14, Blackrock in Co Louth, Cashel in Co Tipperary, Ballina in Co Mayo, Cavan, Longford, Youghal and Charleville in Co Cork, Birr in Co Offaly, Kilrush in Co Clare, Caherciveen in Co Kerry and Wexford town.

Of the 24,334 units sold this year, 23.2pc were bought by investors (5,643), 25.2pc by FTBs (6,137) and 51.5pc (12,554) by previous owner occupiers.

Some 1,700 new homes were sold in the first nine months. 15.5pc (263) were bought by investors, 33pc (561) by FTBs and 51.5pc (876) by previous owner occupiers.

An analysis of the areas where first-time buyers purchased 10 or more units showed that sales were largely focused in commuter towns serving cities.

The highest rate of sales for this cohort was in Dublin 22 which included Clondalkin, where 70pc of properties were sold to first-time buyers.

It was followed by Balbriggan in Co Dublin (65.5pc), Athenry in Co Galway (60pc), Ashbourne in Co Meath (57.9pc) and Midleton (55pc), Mallow (52.6pc) and Glanmire (50pc) in Co Cork.

In 11 other markets, more than 40pc of units were sold to first-time buyers. But as this group fled to the suburbs in search of a home, investors focused on homes in prime areas.

More than half of all properties purchased in Dublin 2 were bought by investors, and 44pc in Dublin 1.

Irish Independent

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