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PROPERTY PRICES IN Dublin increased by nearly 20% in 2014, but slowed down in the final quarter of last year due to uncertainty surrounding the Central Bank’s new rule on 20% deposits.
According to the national survey by the Society of Chartered Surveyors Ireland of over 400 estate agents, property values are estimated to have risen by approximately 14% nationally last year.
In Dublin, property values are estimated to have risen by 19.5%. If you exclude Dublin, Leinster values are estimated to have increased by 15.8%, while in Munster and Connacht/Ulster they rose by 9.6% and 10% respectively.
Too restrictive
The increase moderated in the second quarter, with 80% of respondents stating that the bank’s LTV proposal is too restrictive and recommending a deposit in the 10% to 15% range.
Simon Stokes, Chair of the SCSI’s Residential Property Professional Group the new deposit rule will impact Dublin the most, where he said property values are higher than other parts of the country and where buyers have to raise a much larger deposit.
We now need clarity around the proposed measures so that people wishing to buy can plan ahead and avoid further uncertainty.The proposal is also causing apprehension among builders planning new housing developments, which the market urgently requires.
While he said the SCSI agrees with the objectives of the Central Bank, it would rather see a deposit in the range of 10 to 15% being required.
Cash buyers
According to the study cash buyers accounted for 40% of all residential sales in 2014 but SCSI members expected this level to fall in 2015 as the level of mortgage lending approvals increases.
For the year ahead, the SCSI said the pace of property price inflation is expected to moderate in 2015 to 5-10% nationally.
The survey also looked at rents nationally.
In Dublin, rents increased over the course of last year by an average of approximately 15%, in Leinster by 13%, in Munster by 8% and in Connacht/Ulster by 9%.
“While rents are still approximately 5-10% off peak levels in prime Dublin locations, the continued increase in rents is threatening our economic competitiveness” Mr Stokes said.
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Society of chartered surveyors eh? Yeah they’d be unbiased.
I’m looking to buy my first home with my wife and I can’t wait for this to be introduced. It’ll bring clarity, deflate prices and mean that I’m not competing for houses with some eejit who is leveraged to the hilt.
Next thing to tackle is the complete lack of transparency at auctions.
What do you mean by levereged to the hilt?
Some with leverage to force the price up meaning they get the house, ie cash.
I don’t think having cash up front would make much of a different in this case .. either you have the deposit or you don’t. It does mean though that when you do have the cash you won’t be competing against somebody that “doesn’t”, if ya know what I mean.
I meant someone who is willing to take on a lot more debt than I am for my salary. There are plenty of people who think that 90-95% LTV is grand, and who also are willing to fudge their savings/salary to get a higher mortgage. I want to be competing for a house with someone who saved their deposit and not against someone who managed to get a higher mortgage *somehow*.
Literally speaking, 10% or 50% deposit makes no difference to cash buyers! They cash that means 100% deposit buyers. I’d do 15-20% cash deposit for FIRST TIME BUYERS as they are the genuine buyers, that means HOMELESS PEOPLE. And they have human right for shelter even by low. And 30-40% for all others (improvers, downsizers, investors ect) In other words, I’d make it easier for people who in real housing need, and harder for speculators. BTW it works in Scandinavia, and works well.
I had a feeling that’s what you meant Denise :)
I feel in this regard however, the repayment rules (i.e. x amount of salary) are far more important than just deposit. It is still possible to heavily leverage yourself with a deposit (you just “get more cash together”) but even still if they can’t demonstrate they can afford the repayments they will be refused. It baffles me that this aspect doesn’t get more discussion.
Shamrock.. that’s what I mean by it being an incomplete solution. The application of this rule across the board to all buyers doesn’t take into account the fact that “as collaterol” the home you actually live in, is worth much more than a property you bought merely to invest in. You will fight harder to keep it, and the bank can hold its loss over you moreso than just repossessing a second home.
It wasn’t so much people buying properties they couldn’t afford that has caused the problem so much as people buying “a few” properties they couldn’t afford. Why there aren’t different rates for people buying beyond just a home is beyond me (though I could guess, but I don’t want to start getting into conspiracy theories right now :)
Not to mention the lack of complementary rent controls.
38 downvotes, genuinely didnt know what he meant!
Overindebted
Inflating the bubble again, beware buyers, you might be buying a pig in a poke.
So they let house prices rise, people can’t buy, then people have to rent, rent rises, then people can’t save to buy. Something has to be done, bloody property will be the death this country
pure buyers being milked either way
The rules are supposed to stop another bubble happening. We’ve already tried reckless mortgage lending and it hasn’t worked, but a lot of the critics here are effectively calling for a return to the Celtic Tiger mindset. These rules can’t come soon enough.
It’s only a half-solution though. A 60/40 rule.
Dublin rents spiralling are resulting in people being able to save less. A lot of these properties are in Nama too which means it is the government that are driving this. On top of this the government are saying we need to save more to buy a house. So we have to save less in order to stay where we are but at the same time save more if we ever hope to leave and buy our own place. I’d love to see what the government suggests I do
It’s not a governmental decision, its the central bank.
Nama do not own property, they own the loans and in an effort to save the taxpayers further losses, they, rightly or wrongly, want the best return.
The government are opposed to the plan, because they want property prices as high as possible because it gives the twisted and distorted perception that our banks do not have massive holes in their loan books.
But hey, don’t let the facts get in the way.
Of course it’s the governments decision and rightly so. They have a social mandate, the central bank obviously don’t care about social issues or the wouldn’t be introducing this without calling out the government on the genital crisis.
If this comes in In its crudest form it would lead to the government losing all support in Dublin
I mean rental crisis but this could also cause a genital crisis.
You can keep repeating it Luke, it’s not true. Noonan has exerted massive pressure on the CB, look it up.
Luke, I want to put this point to you. Last year Dublin house prices rose by 20% in some places. If I had 20k saved for a 200k house, then now the house is up to 240k and I need 4k more, on top of that, my rent will probably rise by 10%.
If the measures are not introduced, then as soon as any supply comes on, there will be a release of credit, more reckless lending and borrowing.
This way buyers must adjust their budgets and sellers lower their expectations.
Tough for some, sure, but my kids, who are starting out in their lives already know that things have changed.
Patlyndo, you might not realise this from your ivory tower but we are in the mists of a rental and housing crisis.
I am not against these measures persay but they need to be impliemented as part of a suit of measures including drastic rental market reform, investment in socail housing and targeted measures(be they carrott or stick) to compel developers to start building again, especially in Dublin.
Jack O’Connor, is right when he says that only rich kids wil be able to get houses once this comes in. The absolute mess that is our housing policy needs to be dealt with now because there is already significant hardship being put on young familes who are renting in sub standard housing with no prospect of getting out of it this decade.
Luke, like many, sadly, you mistakenly see the role of the CB and the government as one and the same. It’s not.
He regulates the banks and the government look after social policy.
He’s doing what neary failed to do. Social problems not within his remit. I already advised you to research Noonan and his housing policy and his objections to the mortgage changes. You clearly didn’t, if anyone is in an ivory tower, it ain’t me….
House price rises of ~20% a year is a false market. These rules can’t come soon enough (if only they were introduced ten years ago)
We bought our house 10 years ago and we needed 8%. If we wanted to buy our house today and needed 20% the deposit amount would be roughly the same due to the drop in value of the house.
Was rent the same back then? Genuinely curious
We were renting a 1 bed shoe box place for 1000 a month. Mortgage was cheaper than that and still is. I was also on half the salary I am on now, less than half even. We couldn’t afford to buy in Dublin so we bought in Laois, commuted for a few years and then got jobs down here.
Ok so if im understanding you correctly your house in Laois is as difficult to acquire now as it was ten years ago? I assumed you were talking about Dublin
And furthermore If you needed to buy your house today with the current 10%, your drop in value and your double salary you would find it easier than you did then? Im failing to see your point about an article that discusses greater difficulty to buying in Dublin with the new deposit rules
my point is, just because you want to buy in Dublin doesn’t mean you have to buy in Dublin, there are other options.
Why don’t banks gradually increase it until the market stabilizes and we can stop the ever increasing prices for shoeboxes that is happening at the moment. 11% this year to a max of 18.5% or maybe 18.75%. Introducing it straight away will only be a positive for all the landlords and people who have two and three houses already. But as usual the government and the central bank only think of the rich which is themselves.
Surely some sort of tax free saving scheme for first time buyers wouldn’t break the bank? It also wouldn’t risk over heating the market if it was limited to the lower rate of tax.
Luke, that’s already in place as far as I recall. No dirt on savings for property deposits.
What is your agenda man?????
Dirt is charged on interest on savings, I am talking about allowing people to set up an account(simular to the SSIA) and then getting tax credits back for everything they put in to that account as long as it goes towards a deposit for a house. Kind of simular to claiming back for medical expenses.
Last years budget saw introduction of relief on dirt on savings by ftb’s, it’s not much, but it’s a help. Seriously Luke, you need to look at your own agenda, you need saving from yourself.
The bottom line is this, only the rich will own property and the working people will have to rent. That in itself is a society timebomb
Fixed your headline…
Renting a house in Dublin? You’ll feel the brunt of the new mortgage rules the most
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