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Savings made during Covid-19 crisis ‘will help fuel price rises in housing market’

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Potential buyers have managed to save more money for a house deposit during lockdown.

Potential buyers have managed to save more money for a house deposit during lockdown.

Potential buyers have managed to save more money for a house deposit during lockdown.

PROPERTY prices are set to be pushed up further as would-be buyers have been able to put aside more money during the pandemic.

While some households have suffered greatly from the financial impact of Covid, the shutdown in spending means others have been able to save more than ever. The majority of prospective buyers have put away more for a deposit since the onset of Covid-19, a new survey suggests.

It emerged this week an additional €1.7bn was put into savings accounts in banks and credit unions in October, taking these deposits to a high of €123bn, as Irish people continue to have one of the highest savings ratios in Europe.

It comes on the tail of record mortgage approvals for October, driven by first-time buyers.

Taoiseach Micheál Martin admitted the poential impact on the housing market would have to be assessed.

“Covid has created a situation which will ultimately have an impact on housing,” Mr Martin told the Dáil.

“There has been an enormous increase in household savings throughout the country because of the impact of the crisis on spending in the economy during the past nine months. That is being evaluated in terms of its potential impacts on the market over the coming year.”

House hunters already face the challenge of a lack of supply, exacerbated by construction work slowing down or stopping altogether during lockdown.

But property website MyHome.ie says 58pc of prospective buyers have been able to save more money for a deposit. Meanwhile, 41pc of survey respondents agreed the market is more competitive now than before Covid-19 emerged. Just 17pc disagree with this statement.

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And only one in five believe property prices will fall significantly, by more than 5pc, in the coming year.

Angela Keegan, managing director of MyHome.ie, said the findings gave a fuller picture of the effect of Covid-19 on the home-buying market.

“These survey findings show us that prospective homebuyers are still largely insulated from the economic effect of Covid-19, but the virus has still had a significant effect on the sector – supply issues are still a huge concern due to the suspension of construction activity during the first lockdown,” she said.

“Once the economy gets back up and running we will hopefully see an increase in construction activity which would redress the balance between supply and demand.”

Speaking yesterday in the Dáil, the Taoiseach admitted “the bottom line is that the output in 2020 will be approximately 18,000 houses, if we get there. Covid has had a very negative impact.”

This is below the target of 25,000, which remains the aim for 2021. “There is no huge private sector out there at the moment in terms of house construction,” Mr Martin said.

Mary Lou McDonald of Sinn Féin claimed the Help to Buy scheme is inflationary: “It transfers taxpayers’ money directly into the pockets of developers and increases property prices.”

Quoting figures from the Banking and Payments Federation, she said the data pointed to a very worrying spike in house prices.

And she suggested this reflected the “broken” housing policies of the Government and its predecessor.

“On average, first-time buyers are now borrowing €10,000 more than was the case last year,” Ms McDonald said. “It is worse for other borrowers, who are borrowing €15,000 on average more than was the case last year.

“This reflects a very serious hike in house prices, which is a problem at any time but is outrageous in the middle of a pandemic when the incomes of so many people have collapsed.”

The Taoiseach said Covid-19 had had a very significant impact on the housing situation, with Rebuilding Ireland home loan approvals down this year for that reason.

The Budget included a €3.3bn investment programme for both social and affordable housing, the largest ever investment in housing by the State, he said.


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