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LOOKING TO GET your foot on the property ladder? New research finds it could take you over six and a half years to save for the deposit.
A new Behaviour and Attitudes survey carried out on behalf of 11 different organisations on the impact of the Central Bank mortgage rules, has found the time period required to save for a deposit is six years and six months.
It also found that people are looking to family members to help them out when buying a house.
A total of 42% of prospective buyers said they will need a gift from family for a deposit, with 37% of first-time buyers saying they will rely on a family contribution in saving for a deposit.
Saving for a deposit
Announced in January of last year, the Central Bank rules mean that buyers are required to produce 20% of a house’s value as as deposit, while first time buyers are only required to produce 10% on properties up to a value of €220,000.
Prospective buyers are also limited to borrowing 3.5 times their gross income.
The research – involving 1,072 participants nationwide, including existing homeowners and prospective buyers – found that 71% of first-time buyers felt they had been impacted by the rules.
While two in five people said they have yet to start saving for a house, two in three are endeavouring to save while also paying high rents.
The survey found that over 50% of people have had to rule out the area they actually want to live in due to unaffordability.
Two in three people are looking in areas more than six kilometres away from where they would like to live, while three in 10 people are looking further afield, some 15 kilometres that where they would ideally like to settle down.
Putting on on the ‘long finger’
A total of 69% of those planning on taking on a mortgage have put buying a house on “the long finger”, according to the survey.
Speaking on behalf of the group, Michael Dowling, chairman of the Irish Brokers Association Mortgage Committee, said:
We all share the Central Bank’s objective of increasing the resilience of the banking and household sectors to shocks in the property market. However, there are serious unintended consequences arising from the rules, which are reverberating way beyond their intended purpose.
They are contributing to an inequality of opportunity between those with family wealth and those without. And they are leading to urban sprawl as buyers move further from their desired locations.
Despite the survey findings, the Central Bank indicated in June that there was no change to the rules coming down the line.
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The central bank rules are there for a very good reason,Having seen one property bubble pass me by and not being able to afford to purchase a house in my area I am still of the opinion that they should remain. In fact i think even more rules should be put in place to ensure our market does not get overheated. Houses should be affordable and people should not get easy credit as one or two interest rate hikes and we are all back to 2007.
In addition more must be done to tackle vacant sites which developers are sitting on. More needs to be done with nama stock so we deliver more affordable housing. The central bank rules make sense now let’s have a housing stock that makes sense to go with it
true podge, we need enough affordable houses and they shouldnt be made affordable by excessive credit
If you are renting then I think that should be taken into account. We’ve been paying €1400 a month for the past two years surely that could be acknowledged somehow.
Estate Agents need to be regulated. I know of a couple of current cases of people buying and the estate agents trying to start bidding wars, not going back to the seller with offers, claiming offers were refused despite not telling the people it was refused etc etc. The old shenanigans of the “good ole days”.
If estate agents got a flat fee instead of a percentage, this simply wouldn’t happen.
While I agree that easy credit should not be available, if you are renting in Dublin and have any children at all in creche or childcare, there is a massive difference between coming up with a 30k deposit or a now-60k/70k deposit. All the new rules mostly do is freeze out a giant swathe of people who up until these ridiculous deposit rules came in, were actually considering the purchase of a house in the next few years. We can afford to pay a mortgage (our rent is more than our mortgage payments would be in our area) but saving 60k or 70k or more is practically impossible. They could have enforced a variety of rules around income, outgoings, credit history — but no.
Estate Agents are regulated but not sufficently so. If an estate agent doesn’t pass on a reasonable offer to the vendor they they are breaking the law.
All the rules are doing now,is allowing venture capitalists to seize all the property with cash purchases. The goverment wants it this way, encourages it and keeps the property demand under its control with NAMA. Regulation of estate agents does not exist, phantom bidding is back, even for renting property. Some agents in dublin now ask for non refundable deposit fee just to view appartments for rent.
I would say that it is acknowledged Deborah. It would reflect your payment history and you ability to pay a mortgage.
Reg, there is nothing in the country that is sufficiently regulated, when it involves money being taken from joe public. It is deliberate policy.
Home ownership is a thing of the past, unless you’re one of the elite now a day. And that also is deliberate policy.
There’s more money in mortgage to rent, and it keeps property in the hands of the elite, or Vulture funds.
I can confirm about the rent going towards your payment capacity. If you are saving 500 a month and paying 1500 then that’s your capacity. You still need to stump up the ~40k so that WHEN the market goes bust again, the country isn’t left footing the bill on bad loans.
I agree 100% with the comments above. The restrictions are fine but the market is non-functioning. Houses need to be made more affordable but there are too many vested interests (including the older generation hoping price increases wipe out their negative equity).
This is why social housing should be a right for everyone, and not the elite group of self entitled spongers.
I thought it was agreed a few years back not to use the term “property ladder” anymore.
Property Snakes and Ladders?
I relied on the kindness of strangers to save up my deposit for my mortgage. Of course I now owe that Satan fellow my first born child…
Could take you over 6.5 years? No sh/t, it could take you a lifetime!
Parents in the 80s mortgaged for 15 years on a 3 bed semi d 23k. Now 35 year mortgage same house 420k. And I know inflation etc to be taken into account however the fact is we are a lot poorer now because of inequality in pay
Across the job market.
BRING BACK 110% MORTGAGES!!1!eleventy!!
Given the action taken by the central bank to prevent another crash..why the hell are rates allowed to stay so high?..and rent payments should be factored into a mortgage application..maybe by reducing the deposit required where a couple have been renting..with a proven history of payment…
Doesn’t make sense. Then if you default the bank has a 90+% bad loan on its books. Your renting shows you can repay but you need to invest capital into the loan. It’s the way the market always should have been.
The lack of supply is killing the rental and buying markets. Once fixed, the current rules will be a godsend.
Buy a site and build on it! Avoid living in debt as much as possible.
Only Cork and Dublin cities are being negatively effected by the +€220k rules for first time buyers. These are the places you can’t just buy a plot!
Yes true, I meant where possible. Imagine living mortgage free, no noose around your neck.
have to start accepting the need normal in Ireland will be many people will never own. As we had the highest rate of homeownership in the world it was always going to change along with the rest of social changes
Then bring in 5 or 10 year rent agreements and more rights for tenants.
Council renting schemes (rather than house for life schemes) will be well able to meet demand and will push down rental costs for those wishing to save for a purchase.
In London, estate agents visit a rented flat 4 times a year on behalf of landlords. No wonder people want their own place with that type of carry on.
It always took years for a deposit…took us over 5 years to save with no family help.
It’s almost as if people want to buy houses they can’t afford.
People who take out mortgages cant afford to buy a house, that’s what a mortgage is for.
Think of it like a river that floods & dries up unpredictably. Once a dam gets put up, the massive floods gets stopped, but the flow gets manageable.
Are you drunk?
Colm I don’t think you’re a half of 7/8’s as smart as you think you are.
I wouldn’t be dumb enough to trap myself with a mortgage.
Mean 10% on 220,000
20% on €220,000 came in 1,1/2 years ago while house prices have increased yet the limit hasn’t it should rise with prices. Make it easier for first time buyers. House was €300,000 now €400,00 difference is 38,000 to 58,000 deposit yet rules stay same
have your say