Residential property prices climb almost 15% in 12 months

Residential property prices climb almost 15% in 12 months

Posted on 16Mar

The average price of buying a residential property increased by 14.8 per cent nationally between January 2021 and January 2022 according to figures released by the Central Statistics Office (CSO).

The increase was slightly higher outside of Dublin (16 per cent), while the increase in the capital was noted as 13.3 per cent.

The median price of a home purchased in the 12 months to January was found to have been €280,000 nationally. On an area basis, Longford had the lowest median price (€130,000) while Dún Laoghaire-Rathdown in Dublin had the highest median (€595,000).

The latest figures show a 0.9 per cent monthly change compared to December 2021.

In terms of residential property type, prices of houses in the Border region saw the largest annual percentage change (+24.7 per cent), followed by houses in the southeast (+18.8 per cent) and houses in the midlands (+18 per cent).

The prices of apartments nationally (excluding Dublin) jumped by 17.5 per cent, and by 11.8 per cent in Dublin.

The CSO figures show the national index is now 3.3 per cent lower than its highest level in 2007, with Dublin residential property prices 11 per cent below their February 2007 peak, while prices across the rest of the country are 4.7 per cent below their May 2007 high.

Since their low point in early 2013, national prices have risen by 115.6 per cent. Dublin’s prices have soared by 120.4 per cent from their February 2012 low as the rest of Ireland has noted a 119.4 per cent increase from May 2013.

Commenting on the figures, head of credit with Joey Sheahan says first time buyers continue to make up a strong cohort of the market.

“Demand for homes is unlikely to slow down, given the pace at which housing stock is entering the market. The extension of the Help-to-Buy Scheme remains a big support for first time buyers.

“We’re now seeing much larger deposits on the back of the pandemic, primarily down to the fact that some first time buyers have been able to save up substantial deposits.

“While the cost of buying continues to increase, the cost of renting is almost always higher. As such, we’d advise those in a position to buy, to go ahead once they find a suitable property,” he adds.

Mr Sheahan notes the number of ‘trader uppers’ is also on the rise since the pandemic, explaining: “People have had a chance to take stock, and many are deciding that greater space in the home is important to them.

“With the cost of building and building supplies on the rise, and the difficulty in getting tradespeople, people are opting for turn-key trade ups in greater numbers.”


How to go about gifts to take stress out of mortgage deposit

Posted on 11Dec

How to go about gifts to take stress out of mortgage deposit

Know your rights when seeking help from parents to get on property ladder

Forget AIB, Bank of Ireland or any of the remaining stalwarts of Irish finance. It’s the Bank of Mum and Dad that is giving most first-time buyers a step on the property ladder.

According to data from the Banking and Payments Federation (BPFI), 42pc of new home purchasers used a parental gift toward their deposit. And they needed it: €52,500 is now required on average to get a first-home deposit together – a doubling from a decade ago. And despite a record 31,000 new builds commencing this year, it isn’t anywhere near enough, or fast enough, to curb house price inflation.

The total value of gifts alone was €210m in the first six months of the year, and that’s worrying enough for the Government to have at least considered taxing it in the budget. It is inequitable for one – not everyone has a wealthy parent to contribute – and of itself, it inflates house prices.

Ray McMahon, chief commercial officer at ICS Mortgages says: “This would reflect what we are seeing from our customers also. What is particularly of note from the BPFI figures is the significant number of second-time buyers who are also utilising gifts – a trend we are increasingly observing.”

There are conditions attached, but it’s normal for a lender to facilitate gifts as part of the deposit as long as it’s clear who’s giving it and under what circumstances, he says.

And when is a ‘gift’ a ‘loan’ or vice versa? If it is due to be repaid, it should have interest charged, with gift tax implications – this is what is being considered in the future by Government. But with ordinary interest rates at zero, it’s difficult to see how parents could charge kids interest on a loan they’re happy to hand out.

If it’s gifted, it matters by whom and for how much. Such things don’t bother loving parents, but they do concern Revenue officials and banks.

With house prices inflating by 12.4pc year-on-year and rents up by more than 7pc, what is a saver to do?

Interest rates are not only zero, but negative, given the effect of inflation – currently running close to 5pc. Yet try to do anything risky with the cash by way of eking out a return and the lender immediately frowns. Coupled with having to shell out more income toward rental while also saving, makes it very difficult.

 The Rules

First-time buyers need not just 10pc of the purchase price, but an additional 2pc or so to cover stamp duty and fees. They need to be able to show capacity to service the debt, plus 2pc added for ‘stress test’ purposes along with their mortgage protection and home insurance. Oh, and they need to buy clothes, pay bills, food, pay creche fees and the other sundries of modern life.

Joey Sheehan, author of The Mortgage Coach, says the purpose of the Central Bank’s macroprudential rules on lending (which were not changed in its latest review), “is to ensure buyers cannot borrow more than they can afford to repay”.

He recommends transferring savings into one dedicated account to save a regular amount each month. “Avoid making withdrawals. It’s better to save less on a monthly basis and then add extra when you can rather than over-saving and dipping into it”.

He adds a lender will grant Approval in Principle (which lasts six months, but is easily renewed), when they can see the required percentage of purchase available.


When it comes to gifts, there are strict rules, both legal and financial, in place. Firstly, a gift must be just that. Banks don’t like to see additional loans being set up, either from the Credit Union or Mum and Dad, which could reduce a borrower’s capacity to service the mortgage.

They will typically demand a ‘gift letter’ or in some cases a Deed of Gift, witnessed by a solicitor to show that the parent has no expectation of getting their money back and that no secondary claim is put on the property. If there is capital acquisitions tax due, they’ll want evidence it has or can be paid.

A parent can gift up to €335,000 to a child without gift tax being applied. However, this is a lifetime cumulative limit, from both parents, for all gifts, and inheritances and any future amount over this threshold will be taxed at 33pc.

A grandparent can gift up to €32,500, again with the same rules applying.
Separately, there is a Small Gifts Exemption permitted of €3,000 per person, per year, from anybody to anybody else.

If it is done cleverly and with aforethought, four parents (his and hers) could gift a couple this amount over the two months (December and January) amounting to €48,000 in total without a tax implication, according to Eoin McGee, author of How to Be Good With Money.

Help to Buy Scheme

Under the Government’s extremely generous tax refund scheme, a gift may not even be necessary, with Revenue refunding four years of tax, to a maximum of €30,000 toward a deposit for a first-time buyer.

Securing a mortgage

Aside from the deposit, there are a lot of things you can do to get yourself mortgage ready. Banks like consistency, stability and diligence. Looking like an attractive borrower can be achieved in a few steps.

Have a good credit record: Missed repayments, even for an insurance premium or small loan is a red alert for lenders. Get your credit history from the Central Credit Register before the bank does.

Keep your spending ‘clean’: We’re all ‘tapping’ our way through life more than ever, so it will be crystal clear to a bank what you’re spending your money on. They get suspicious if they see unexplained large withdrawals of cash, frivolous spending or money being used to servicing a gambling account, even if you’re winning. If you use an app like Revolut or a different account to buy crypto currency or you have a store card, they’ll also want to see that.

Having a constant overdraft not only costs a lot, but it smacks of financial indiscipline. Control your direct debits, cut back and get rid of it six months before you apply for your mortgage.

Your income must be able to service a mortgage if interest rates were to rise by 2pc. This is the ‘stress test’ and banks will apply it before agreeing to lend. Work it out and be prepared to prove it.

Control your ‘nets’: No more than 35pc of net income should go on debt servicing. Pay off existing loans (highest-interest bearing ones) before applying for a loan, even if it means saving for longer.


I have €20,000 for a deposit and am saving €1500 a month but lenders are still refusing a mortgage for my self-build home project – what are my options?

Posted on 29Oct

I am currently attempting to get a self build mortgage in the west of Ireland. I know the timing is not the best.

I had spent money on a QS to get costs of the build. I own the land, have the planning approved and an engineer ready. I have approached a number of lending institutions who are telling me that I don’t have enough disposable income.

When I ask for the formula used to calculate this no one will divulge this information. I have three children and am looking for €214,000 with €20,000 in savings and €1,500 a month added to that.

For a 20 year mortgage costing €1,105 per month I am still getting refused.

I’m not sure what they are looking for. If I can save enough each month that has €400 of contingency for interest rate increase or get 20 year fixed rate, why do they say I don’t earn enough? Can you help?

This must be irritating for you especially as it seems as though you could feasibly support this mortgage amount.

I would disagree with your first comment however, timing has never been better!

While construction costs are inflating, getting a mortgage is currently, for most, the easy bit. There are a few elements here which I’ve asked Joey Sheehan, author of ‘The Mortgage Coach’ to address, but first I’m curious as to why your email doesn’t mention the Help to Buy scheme.

This is a very valuable tax rebate available from Revenue which effectively refunds all the tax you (and your partner, if applicable) have paid over the last four years to a maximum of €30,000.

This would bring your deposit up to €50,000 which would appease any bank greatly as it de-risks the loan to value ratio for them. It is available on one off new builds as well as new home schemes and I can only assume if you have not applied for it, it may be because you are not a first time buyer.

Mr Sheehan adds: “This is frustrating however each bank has a different stress testing calculation.

“The first thing to do is to use the longest term possible which reduces the stress test. So for example, while you wish to avail of a 20 year term, if you are only say 35 years old, you could actually avail of a 35 year term (to age 70) which stress tests the application much easier and should help with a higher loan amount as the monthly repayments will be lower.

“You can always alter it during the term. If you are older, say 45, then your term will be limited to 70 minus your age which would be a 25 year term. I would definitely apply for the Help To Buy scheme as the loan amount is 70pc or more of the build cost plus site value”.

While every case is different a specialised mortgage broker may be able to do the leg work for you for a modest (or no) fee.

I’m interested in the shared equity scheme announced by the government as I am anxious to buy a home but cannot afford the mortgage necessary. Can you explain how it would work and what the limits on it are?

The Government announcement on this proved to be a little previous.

The Central Bank has taken issue with some elements and wants to take a further look. But they are due to report on this next month and we may have more clarity of how it will work then.

It’s based on an existing scheme in the UK which works quite well in expensive areas like London.

Essentially all that is happening is that if you, under certain conditions linked to your income, status and house, ‘buy’ a home for say €300,000, and cannot afford all of the loan on this, the State will take a stake in it, probably around 20pc for five years or so, and you only pay the mortgage on the remainder.

There would also be price caps on these homes in certain Local Authority areas.

On the plus side, it would create a building stimulus on unused land, with the guarantee that the homes would be somewhat affordable.

The concerns are whether it could be inflationary and force borrowers to take on too much debt.

If developers know that the State will be co-owner, then they might see the price as a target instead of a limit. In addition, there could be legal problems where the bank doesn’t have first call in the event of mortgage default, and whether they would be forced to lend in breach of their own rules, above the Central bank limits.

As for insurance, what life insurance, or indeed, home insurance do you effect and who owns the policy?

When all is clearer, and we have guidance on the scheme, I’ll be writing again on the topic, as will other commentators, and we’ll have a better sense of how it will work.

Email your questions to [email protected]

The Ryan Review

We may think we’re alone in having unaffordable mortgages on overly expensive homes, but we’re in the penny ha’penny place compared to Japan.

They were forced to introduce 100 year mortgage terms in the 1990s. The inter-generational home loan saw houses (and debt) passed from grandparents through children and grandchildren. It was because of the sheer price of the most expensive real estate on the planet (Tokyo), and also inheritance tax laws which saw most of a family’s wealth whipped away on death.

The long term loan meant the house was never unencumbered, and therefore saved to the next generation.

I was reminded of it with research from Aviva showing that 27pc of mortgage holders expect to still be paying off their loan into retirement, helped by part time jobs to supplement their pension income.

While we had a ‘moment’ here where banks were falling over themselves to offer mortgages with parents as guarantor, I’m not sure it would catch on.

But, hey, it’s the Irish housing market. Anything might happen.


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