Thursday 17 October 2019

Mark Keenan: 'Kirstie and Phil can beat location drum all they want - here it's about mortgages'


Location, Location, Location presenters Phil Spencer and Kirstie Allsopp.
Location, Location, Location presenters Phil Spencer and Kirstie Allsopp.
Mark Keenan

Mark Keenan

'Location, Location, Location' - it's the name of the most popular and longest-running property programme of them all.

And its hugely popular presenters Kirstie Allsopp and Phil Spencer never cease to remind us that, as the title suggests, location is the single most important factor in buying a home.

For a long time here, and everywhere else, that was true.

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But for city buyers in Ireland in 2019, they can forget about location, now it is all about mortgages, mortgages, mortgages.

You are lucky if first you qualify for one, secondly if you can manage to pay rent and save for that vital deposit, and finally if the bank will pay out.

More recently, the sales completion process has been stretching out further and further thanks to legal delays, additional bank procedures and vendors who lose interest waiting around for i's to be dotted and t's to be crossed.

But for the first time since our survey began, agents in a number of markets have said buyers are citing Central Bank-enforced lending rules as playing a pivotal role in determining where they actually buy their homes. This is particularly the case in Dublin where the regulations have most effect.

In the capital, but also indeed in Cork and Galway cities and north Wicklow, the strictly enforced loan-to-income ceilings mean that sales activity can be busy in an area where homes are available below €350,000.

But once that price level is reached, average buyers can no longer get mortgages and activity cools off noticeably.

"Our agents report that buyers have been less location specific and more driven by price in Dublin and surrounding areas in the first quarter," says Barry McDonald of REA.

What it means is that young families, particularly those moving from rental properties, are less worried about trying to buy in an area but are very much more concerned about the type of home they can get for their limited mortgage.

It means they will first of all diligently save, perhaps for a few years, to get their 10pc to 20pc deposit together. Once that is done, they will typically see what houses are available for their loan limit across all city locations and chase after the ones they deem to offer the best value.

In Dublin especially, where the average three-bed semi is now priced at €437,500, almost twice as much as in the regions, the areas in which three-beds are available for €300,000 to €350,000 have been fast drying up in these past two years.

The same has been happening now in adjoining commuter counties. And with the arrival of new homes in numbers in some locations, prices had to slow and cool down.

It's regrettable that, even as prices are cooling, only the well-paid can afford a family home in the capital, Cork city, Galway city and indeed in many of the towns in Dublin's surrounding counties. But were it not for the Central Bank's stricter lending regime, the damage of an unfettered credit boom could have been the ultimate upshot.

Irish Independent

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