Over 40% of first time buyers used gifts as part of their deposit in the first half of this year, according to new figures from Banking and Payments Federation Ireland (BPFI).
The latest housing market monitor shows that the median deposit for first time buyers was over €52,000 during that period.
Meanwhile, the median deposit for mover purchasers was €135,000, with almost a quarter of such buyers using gifts towards their deposits.
BPFI estimates that during the same period, the total value of gifts towards deposits was almost €210 million, €149.3 million for FTBs and €60.4 million for mover purchasers.
Savings were almost four times that of gifts, totalling around €795 million.
For mover purchasers, other sources such as inheritance and the proceeds from the sale of a previous property are significant sources of deposits.
Rising house prices
Brian Hayes, the chief executive of BPFI, said rising house prices are driving deposit amounts.
He pointed out that house price growth has accelerated in recent months, mainly due to the imbalance between supply and demand – where supply was seriously affected due to the pandemic.
“Residential property prices increased by 12.4% in the year to September 2021 at the national level, where average prices of new homes were up by 3.3% year on year whereas average prices of existing homes increased by 13%,” he said.
“Average prices increased by 11.5% in Dublin and 13.2% outside Dublin in the year to September 2021,” he added.
‘Substantial’ uplift in housing supply in the next two years
While annual housing output was flat last year and throughout this year, the report states that it is expected to increase significantly next year.
13,574 units were completed in the nine months ending September 2021, a slight increase compared to the same period in 2020.
However, nearly 27,000 units were commenced in the ten-month period to October 2021, with over 24,000 of these units commenced since April when the construction sector fully reopened.
On an annualised basis, the report states that commencement numbers reached a record high – with almost 31,000 units commenced in the year to October 2021.
Dublin and Dublin Commuter accounted for over 60% of all commencements during 2021.
“There is a close relationship between the number of commencements in a year and the number of completions in the following year, and today’s monitor suggests that the significant increase in commencement numbers during 2021 is likely to lead to a substantial increase in completion numbers in 2022,” Mr Hayes said.
Mr Hayes said the only downside risk to the estimated increase in completions in 2022, is the increasing share of apartments in completions and the likelihood that apartment commencements take longer to complete.
“However, even with this caveat, the monitor concludes there is a significant pipeline of residential home building activity which will lead to substantial uplift in housing supply in the next two years,” he said.