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Young buyers ignore falling house prices

FIRST-time house buyers are reluctant to settle down and purchase a home despite property prices being the lowest in recent years.

Although house prices are the lowest in years, the number of buyers eager to get their hands on a property is still a small fraction of what it was in the boom years.

One of the leading factors is the steady fall in rents.

Property website Daft.ie also issued new figures yesterday showing that an excess of rental properties has driven down rents by 0.5pc this year.

The average nationwide monthly rent is now €760.

The national average for house prices continues to fall and is predicted to drop below €140,000 over the next 12 months.

The figures show that the average first-time house-buying couple are paying 12.6pc of their joint income in mortgage repayments, compared to 26pc just three years ago.

According to the index, the average new-buyer couple paid €644 a month in mortgage repayments in April.

This is €1,323 less per month than the same couple would have paid at the height of the boom in December 2006.

Economist Annette Hughes of DKM Consultants said that affordability was at its highest level in a generation.

Ms Hughes said the average house price had fallen from a peak of €360,000 in December 2006 to just under €200,000.

Just 2,300 first-time buyers took out mortgages in the first three months of this year, compared to almost 10,000 in the autumn of 2006, according to the Irish Banking Federation.

Mortgage brokers said yesterday new buyers were finding it almost impossible to get approval for a mortgage.

Chief executive of the Irish Brokers Association Ciaran Phelan said that it "has never been more difficult to get a mortgage in the Irish market" and suggested that new buyers are deterred from buying by lenders demanding that they have a large deposit.