Saturday 21 April 2018

Mortgage hunters hit by rising house prices

Colm Kelpie

Colm Kelpie

RISING property prices means it is getting more difficult to afford a mortgage in Dublin.

More than a fifth of the disposable income of a first-time buyer couple each month goes on paying down the loan on their house, and that's set to gradually increase before the end of the year, according to the latest affordability index by lender EBS and economic consultants DKM.

Property prices in the capital rose by 3.9pc in September, taking the annual increase to 12.2pc, according to the Central Statistics Office (CSO).

In Dublin, a couple owning their first home and earning about €75,000 would have spent 22.4pc of their net income on their mortgage in September.

And that's expected to deteriorate further to 23.7pc by the end of the year.

"Affordability in Dublin has deteriorated quite a bit over the last six months in particular," said Annette Hughes of DKM Economic Consultants.

"We would assert that is due to a shortage of supply more so than any notable increase in demand. What happens in the next 12 months will be interesting. If house-building picks up and you get more supply, you might see that softening off."

But Ms Hughes said the picture was still much better than during the height of the boom.

"At the peak in Dublin, you needed nearly a third of your income. It's still well down from what it was in the boom," she said.

Outside the capital, prices dropped by 0.1pc in September and remained 2.6pc lower than a year ago.

The proportion of net income needed to fund a mortgage for the average first-time buyer working couple outside of Dublin was 16.1pc in September, down substantially from the peak of 25pc.

The index said that housing affordability away from the capital has been at 16pc throughout much of the year and is expected to rise fractionally to 16.3pc by December.

Irish Independent

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