It's a 'good time' to buy houses – but consumers are cautious
WITH house prices on the rise again as demand outstrips supply in prime locations, budding buyers are struggling to get on or up the property market.
New research carried out by the Economic and Social Research Institute found that while more consumers think it's a good time to buy – and sell – they are still a little cautious and have money worries.
The proportion of those questioned who expect house prices to continue rising rose to almost 45pc in the first three months of this year, up from 42.1pc at the end of 2013.
Dublin-based residents think house prices will jump by an average 4.3pc in the 12 months, compared to a 1.5pc increase in the rest of the country.
"This report shows strong demand with two out of three people surveyed saying it's a good time to buy," said Jim O'Keeffe, head of mortgages at AIB.
"From a banking perspective, 62pc of people are worried about future income and affordability, which shows the key role we have in supporting customers to get a mortgage that they can afford and meets their needs.
"The challenge for us all is the current lack of new housing stock in key locations to meet this demand. If this demand is realised it would get us to a normal 3pc or 4pc of total housing stock being transacted."
The index – which measures perceptions in relation to the Irish housing market and house price expectations – found the majority of potential homebuyers – 66pc – believe it is a good time to buy.
The numbers who equally think it's a good time to sell rose steadily to 9.4pc in the first three months of the year, from 6.5pc at the end of last year.
When quizzed about the risks associated with buying a home, the quantity that cited worries about future income and affordability rose to 61.2pc, up from 58.4pc. Other concerns included interest rates (15pc), changes in family circumstances (14.5pc) and house prices (7.4pc).
Just 5.5pc revealed they were not in the market for a new home because they could not get a mortgage. Another 5.5pc said it was because of income or job security, more than 11pc cited affordability concerns, and almost seven out of 10 said they were not considering buying a new house as they are satisfied where they live.
Overall, the index shows consumers were slightly more cautious about the market this year. It started in September 2013 on a baseline of 100, and rose steadily towards the end of the year averaging at 104.4. Despite peaking to 105 in February, the three-month average weakened to 103.1 by the end of March.
New measures – like the Government's plan to make it easier for first-time buyers to get a mortgage – are not expected to have an impact on the survey results until summer's end.
"The survey shows consumers becoming a little more cautious in their view of the housing market," said ESRI economist David Duffy. "This is probably due to the weakening in house prices recorded at the start of the year. However, the majority of consumers still expect prices to rise in 2014."
The index is based on a telephone survey of over 800 consumers between January and March 2014.