First-time buyers are taking on more debt in proportion to their incomes than purchasers in the UK for the first time since the Celtic Tiger, according to a report by property website MyHome.ie in association with Bank of Ireland.
The average mortgage loan for a house purchase has also exceeded €300,000 for the first time and is up 7% on last year, the report shows.
Annual asking prices were up 8.4% last year, it said.
On average homes are being sold for 9% above the asking price with one in seven selling for 20% above.
The Central Statistics Office data shows sale prices increased by almost 10% over the past 12 months.
Chief economist with Bank of Ireland Conall Mac Coille said prices have “still not softened even as affordability has become stretched through 2024”.
He said: “Demand is still fierce in the market and indeed has strengthened as the year has gone on.”
The report shows first-time buyers are taking on bigger loans than before with purchasers borrowing 3.37 times their income in the first half of last year compared to 3.25 times in the first half of 2023.
This follows the Central Bank loosening the mortgage lending rules so first time buyers cannot borrow four times their incomes.
In the first half of last year, half of first-time buyers had loans just below that limit.
Mr Mac Coille said rate cuts by the European Central Bank will support house prices.
He added that “with limited homes for sale any initial improvement in affordability may be diluted by homebuyers bidding up house prices”.
Mr Mac Coille is forecasting a 4% rise in house prices this year, but added “if anything this view could be too conservative”.
“First-time buyers are also becoming older as purchasers are aged 36 years on average compared to 34 four years ago,” he said.
The report also said there are indications that the rate of growth in the price of renting property is cooling in Dublin where prices were up 2.5% in the year but were up 8.9% outside the capital.
Article Source – Homes being sold for average of 9% above asking price, report shows – RTE