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Property prices rise nationally but fall in capital

The cost of buying a home has risen by more than 10pc year-on-year, but prices are falling in Dublin.

The Central Statistics Office (CSO) says residential property prices in the capital have dropped by 0.4pc in June, compared with a national increase of 0.1pc across the country.

And although house prices continue to increase, the rate of that rise has slowed down.It says that prices rose nationally by 0.1pc in the month of June, compared with 0.5pc in May and an increase of 2.9pc recorded in June of last year.

This is likely due to new rules introduced by the Central Bank in February which require first-time buyers to have saved 10pc of the property price, and second-time buyers at least 20pc, before they can secure a mortgage.

However, in Dublin, prices are falling, down 0.4pc last month. Despite this, prices are still 11.1pc higher than a year ago. The fall was more pronounced for apartments, which dropped 0.4pc, compared with 0.3pc for houses

Property prices rise at fastest pace in the EU

House price rises in Ireland were the highest in the European Union last year.

They increased by more than six times the EU average in the first three months of this year.

The annual rise was close to 17pc in the three months to March compared with the same quarter last year.

This was the highest rise in the EU, according to the Eurostat House Price Index.

The EU statistical office said the surge in prices here was despite prices actually falling in the three months to March.

Sweden had the next highest rise in prices, at 11.6pc in the year to March, followed by Hungary at close to 10pc.

Central Bank rules see easing off in mortgage approvals

The numbers approved for a mortgage in May have gone up, but at a slower pace than the same month last year.

This is due to Central Bank lending restrictions, experts said.

Figures from the banks show 2,461 potential buyers were approved for a mortgage in May.

This was up 20pc on the figure for the same month last year, according to the Irish Banking and Payments Federation.

Experts said this was slower than the rises in the numbers approved for a home loan earlier in the year.

In February the Central Bank introduced limits on lending, in a move it called macro-prudential rules.

Economist with Goodbody Stockbrokers Eamonn Hughes said: “The surge in mortgage approvals ahead of the implementation of the new Central Bank macro-prudential rules was always likely to result in a slowdown once the rules were implemented.”

Income limits causing ‘mortgage lockout’ for First-Time Buyers

Sunday Times article ; results of Mortgage Brain survey.

A new survey of brokers highlights that the income rules will provide a ‘killer blow’ for First Time Buyers (FTB) and not the deposits as previously expected by many analysts. This survey was carried out by Mortgage Brain Ireland, the team behind the IrishMortgages app. Some 200 broker companies were surveyed throughout Ireland. Brokers recommend increasing the lending limits to 4.0 or 4.5 times income.

 

The Loan to Income limits (3.5 times joint income) will be the real “killer blow for First Time Buyers trying to get on the housing ladder” according to Michael Quinn, Managing Director of Mortgage Brain Ireland. Some ” 48% of brokers feel that this income rule will have a high impact on the FTB’s ability to get a mortgage while another 40% of brokers believe there is a medium impact” according to Quinn.

 

Michael Dowling, a leading Irish Mortgage broker and chairman of Mortgage Brain Ireland said: “These new rules will directly impact First Time Buyers’ ability to purchase a home. The rules will likely put home ownership out of the reach of most young FTB’s unless they are earning a substantial salary. For example he points out that a couple who are now trying to buy a house worth €300,000 will need a deposit of €38,000 (12.6%) on a mortgage of €262k and this will require a joint income of €75,000.”

 

The new income limits (3.5 times joint income) will mean that the majority of public sector workers, and those on medium to low incomes, will not be able to borrow enough to buy a home in the city. This ‘mortgage lockout means that only white-collar professionals on high salaries will be eligible to borrow enough to match the high house prices in Dublin, Cork and Galway.

 

The IrishMortgages App survey asked Brokers their opinions on how we could improve the situation. Some 51% of brokers would recommend an increase in income multiples to 4.0 times income, while a further 33% suggested increasing this to 4.5 times income according to Quinn. In the UK the income multiple is 4.7 for single applicants and 4.5 for joint applications.

Fears first-time buyer grant would push up home prices.

A Labour Party proposal to introduce a cash grant scheme for first-time buyers is likely to be shot down amid fears it would cause house prices to increase further.

The measures would mean the minister directs local authorities to provide cash grants to applicants struggling to get onto the property market in cities such as Dublin, Cork, Limerick and Galway.

Dublin Central TD Joe Costello and party chairman Jack Wall said measures are needed to assist those trying to get onto the property ladder.

But senior Government sources have voiced caution over such a move, warning against any such measure that could cause house prices to escalate further.

Mr Kelly is also due to roll out a suite of measures aimed at stalling spiralling rent bills

Rental crisis deepens in first quarter.

Rents rose by 6.9 per cent nationwide in the year to the end of March, according to new figures published by the Private Residential Tenancies Board (PRTB)..

The latest PRTB Quarterly Rent Index, which is compiled by the Economic and Social Research Institute (ERSI) indicates that rents for houses rose 6.5 per cent while apartment rents increased by 7.8 per cent.

In Dublin, where costs are usually higher, house rents were up 9 per cent in the year with apartment rents jumping by 10.8 per cent.

In monetary terms, the rent for private sector accommodation across the whole country rose €54 in the year from €781 to €835. The rents for apartments increased on average by €63 in the 12 months to the end of March while rents for houses were up €49 to €814.

In Dublin, the average cost to rent was €1,325 for a house and €1,205 for an apartment. This compares to €1,215 and €1,087 respectively for the same period a year earlier.

Bill proposes giving powers to Central Bank on rates

The Central Bank would be given powers to limit what interest rates banks could charge on variable mortgages, under legislation proposed by Sinn Féin.

The proposed legislation would give the Central Bank new powers to set out the maximum rate of interest that any of the five domestic banks could charge.

This restriction would mean that a new entrant to the market would not be discouraged by fears that their rates might be subject to control.

Sinn Féin has said the Government’s response to high variable rates has not been adequate.

Some 300,000 mortgage holders are paying among the highest variable rates in the eurozone.

The high cost of variables works out at around €300 a month more than the cost for a similar-sized mortgage in the rest of the Eurozone.

Young people are moving back home to save for a deposit

Thousands of younger people are moving back to their parents’ homes in a bid to save money for a deposit for a house, a survey has found.

The belief that Ireland is likely to follow Europe by becoming a nation of renters is widespread and particularly strong among the 18- to 24-year age group, the survey of 1,000 people found. Three-quarters of people in this age group believe Ireland will become a nation of renters.

But 70pc of all age groups believe that the expectation of owning their own home is now unrealistic.

And brokers have warned people not to be sucked in by “glitzy” offers like cash back and money for paying legal fees when it comes to choosing a mortgage provider.

More than a quarter of people between the ages of 25 and 34 said they had moved back to their parents’ homes to save for a deposit on a home, according to the survey commissioned by Aviva Home Insurance.

Mortgage affordability improves slightly over last six months

Mortgage affordability has improved slightly over the last six months, according to lender EBS.

The EBS Affordability Index suggests that the proportion of disposable income required to fund a mortgage for the average first-time buyer working couple dropped to 19.5 per cent in April 2015, down from 20.6 per cent in October 2014.

As might be expected, the index shows that buyers in the Dublin housing market need a bigger chunk of their pay to meet their mortgage repayments.

In Dublin, a first-time buyer couple requires 22.6 per cent of earnings to fund their mortgage, down from 24.3 per cent in October 2014.

In Cork and Galway, the figure stands at 14.4 per cent and 13.4 per cent respectively.

Longford is the most affordable county in Ireland to buy a home, with a couple requiring only 6.9 per cent of their net income to fund their mortgage.

Mortgage-approval fall blamed on new rules

There has been a “stark” slowdown in the number of people being approved for mortgages, with Central Bank lending restrictions being blamed.

Figures from the Central Bank show that lending for house purchases declined at an annual rate of 2.6pc last month.A total of 2,130 people were approved for a mortgage for a house purchase in April, down from the figures for the previous month.

The average loan approval amount has aslo decreased- currently €188,900, down from €190,300 in March.