House prices increase by €19k in a year – wiping out gains from help-to-buy scheme

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Housebuyers are paying an extra €19,000 for their homes compared with a year ago – effectively wiping out any gain from the Government’s first-time buyers’ grant.

The average price paid for a house/ apartment now stands at €256,193, according to the Property Price Register (PPR), which is up 8pc – or €18,954 – in 12 months.

While there are signs that supply is slowly increasing, it is still well below the levels needed to meet demand. Between January and June, some 3,129, new properties were sold, an increase of 468, of 17.6%, compared with the same period of 2016. Experts suggest at least 25,000 new units are needed annually to curb rising prices and rents.

Surge in mortgage approvals looks set to fuel house price increases

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The number of people approved for a mortgage surged by a third last month, driven largely by first-time buyers.

Potential buyers are getting approved for higher amounts of borrowings, according to the figures from the Banking and Payments Federation. The figures imply property prices will keep rising.

A total of 4,124 want-to-be buyers got approval during May. In the same month last year there were 3,046 approvals, which means the total was up 34.5pc in a year.The approvals in May were valued at €884m in total. The average purchase approval in May was €228,505, up 7.7pc year-on-year.

The rise in the numbers getting the go-ahead for home loans comes as the Government has committed to reviewing the help-to-buy scheme.

53 ‘Help to Buy’ Applications Everyday

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Figures from the Revenue Commissioners show that a total of 4,698 applications have been made under the Help-to-Buy incentive since it opened on January 1.

This equates to almost 53 a day.

Of these, just over half (2,380) have been approved. The remaining 2,318 are being processed.

Applicants who decide to buy a property then proceed to the claims stage.

Some 1,006 claims have been made to date, of which 534 have been approved.

While the total cost of the scheme across a full year is not yet known, the value of the 534 approved claims to date is €8.2m.

This equates to €15,355 each.

Mortgage lending at 7-year high.

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Lending for house purchases rose by a net €27m in the last three months of last year. It was the first net increase in mortgage lending since the end of 2009.

Most new borrowers are opting for a fixed-rate mortgage. Fixed-rate loans for homes recorded a net increase of €657m. In contrast, variable rate loans recorded a fall of €208m.

“This reflects a current trend by borrowers to enter fixed-rate contracts in the current lower interest rate environment,” the Central Bank said. Meanwhile, the Government’s help-to-buy scheme is likely to cost more than originally expected. Based on average applications to date the cost of the scheme so far this year could be €56m

First-time buyers borrowing an average of over €200k

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Surging house prices mean first-time buyers are back borrowing amounts last seen during the disastrous property boom. The average mortgage amount approved for first-time buyers has gone above €200,000 to reach €201,928. In October last year the average was €192,928.

This is the first time the average approval amount for new buyers has hit this level since 2009.

A chronic shortage of properties and the Government’s help-to-buy incentive are prompting new buyers to borrow more. The higher borrowing comes as Central Bank rules on the size of deposits needed to get mortgage approval have been relaxed for new buyers. This chance means they can now get a mortgage with a 10% deposit.

 

 

Interest rates here almost twice EU average.

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The average interest rate on new mortgages here remains almost twice what it is in the Eurozone. The rate stood at 3.38pc in November. Although this has fallen over the past 12 months, it is much higher than the euro area rate of 1.72pc, according to data from the Central Bank.

New variable rate mortgages, which had an average interest rate of 3.38pc, accounted for two-thirds of all new agreements in Ireland over the past year. A bill to allow the Central Bank to force rates lower continues to be examined in an Oireachtas Committee

First-time buyers rush for rebate

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More than 800 applications have been made for the new Help-to-Buy scheme for first-time buyers (FTBs).

Interest has remained high since it opened earlier this month, with some 828 FTBs filling out online application forms over the week in the expectation of securing a lucrative tax rebate.

The scheme allows for a refund of income tax and DIRT, but not USC or PRSI, paid over the previous four years which can be put forward towards a deposit to buy a new house or apartment.

Some 5pc of the purchase price to a maximum of €20,000 can be claimed. A price ceiling of €600,000 applies to homes purchased between July 19 and December 31 last. This falls to €500,000 for properties bought this year.

Help to Buy incentive for first-time buyers

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The 2017 Budget saw the Government launch the much anticipated Help to Buy (HTB) incentive for first- time buyers.

What is the HTB incentive?

The HTB incentive is designed to assist first-time buyers with obtaining the deposit required to purchase/self-build a new home.

Are you entitled to claim this?

You are entitled to claim this if you are a first-time buyer who purchases or self-builds a newly built home between 19th July 2016 and 31st December 2019. You can claim relief by applying online to Revenue from 1st January 2017.

What are you entitled to claim?

You may be entitled to a refund on income tax and DIRT paid over the previous 4 years. You may claim up to a maximum of 5% of the purchase price, up to the value of €400,000.

 

If you have any further queries please do not hesitate to contact us on 01-5052718.

Help to Buy- Budget 2017

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A new scheme is being introduced to provide a rebate of income tax paid (but not USC or PRSI) over the previous 4 years for first time buyers buying a newly built principal private residence or equivalent self build, on or after 19th July 2016. The rebate will be 5% of the purchase price of the property up to €400,000, i.e. a maximum rebate of €20,000 per property (not per joint buyer) assuming the buyer(s) have paid at least €20,000 income tax over the previous four year period.

The rebate only applies where the mortgage is at least 80% of the home value.

Those who will NOT qualify for the rebate include:

• First time buyers who signed a contract to buy a new home before 19th July 2016;

• First time buyers with an LTV less than 80%;

• First time buyers buying a home valued at more than €600,000;

• Non first time buyers; and a joint purchase between a first time buyer and non first time buyer; both purchasers must be first time buyers

The rebate scheme is scheduled to run to end of 2019.

 

 

Good News for First Time Buyers

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Half of mortgages approved in May were for first time buyers, according to new figures released by the umbrella group representing the Republic’s banking sector.

A total of 2,675 mortgages were approved per month in the three months to the end of May up 8.7 per cent on the same time last year.

The figures are contained in the Banking and Payments Federation Ireland’s latest mortgage approvals report.

They show that 53 per cent of mortgages approved in May were for first time buyers (1,441) while mover purchasers accounted for 29 per cent (775).