There will be a “dramatic fall off” in first-time buyers entering the market next year if the Help-to-Buy scheme is not extended.
That was the stark warning from the head of credit at MyMortgages.ie, Joe Sheahan, who was responding to the latest Central Statistics Office (CSO) figures on house prices.
While house prices continue to ease with the annual rate of increase in May now the lowest in six years, prices increased by 2.8% nationally in the year to May, compared to a 3% increase in the year to April.
The average price paid for a house in the 12 months to May was €251,000. Average prices paid in the Dublin region were highest at €366,000 while the lowest price was €100,000 in Leitrim.
While price growth has slowed, prices are still increasing and the rate is faster in some parts of the country than in others.
House prices increased by 5.2% outside of Dublin while prices in the capital increased by 0.4%.
The highest house price growth was in South Dublin at 4% but, conversely, Dun Laoghaire-Rathdown saw a decline of 2.6%.
The border region experienced the highest increase of 15.2% while the Mid-East recorded the smallest rise, at 0.5%.
The average price paid in the Mid-East was €293,185, compared to €140,040 in the border region.
Looking ahead, economist, Alan McQuaid said overall house price growth would stay “in positive territory” for a while yet.
“The biggest price rise is likely to come from outside of the capital, with the asking price for houses in more expensive areas increasing at a slower rate or decreasing in some areas,” said Mr McQuaid.
Brokers Ireland have called for the Help-to-Buy scheme to be extended beyond the end of the year to help aspiring buyers acquiring homes.
Chief executive Diarmuid Kelly said his organisation, which represents 1,250 broker firms, believes the scheme should be extended to include those wanting to buy second-hand homes.
Those not in the new home market, were, through their taxes, helping others who were buying or building new homes and, in some cases, they were quite expensive homes.
There were people who were unable to move from homes that they had either outgrown or worse, were paying rents at historically high levels. “
There is an inequity there,” said Mr Kelly.
The Help-to-Buy scheme gives first-time buyers a 5% income tax rebate up to a maximum of €20,000 on the purchase of a new home valued at up to €500,000. Self-build properties are also eligible.
KBC Bank said the “softer trend” in house prices reflected a range of factors including increased supply, concerns around Brexit and affordability constraints.
“Our sense is that the recent softness in the housing market is amplified by expectations of a further increase in supply,” it stated.
Mr Sheahan, from MyMortgages.ie, said around two in every 10 first time buyers they deal with relying on the Help-to-Buy scheme, which supports the argument that the scheme must be extended in order to ensure the viability of Ireland’s property market and to promote continued growth in mortgage lending.
Meanwhile, there was a 5.5% in the number of dwellings receiving a Building Energy Rating (BER) audit in the first six months of this year, according to the CSO.
Houses built between 2015 and 2019 were considerably more energy efficient with 97% given an “A” rating compared to 36% in 2010-2014 and 1% in 2005-2009.
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