Commenting on the results of the most recent CSO Residential Property Price Index, IPAV, the Institute of Professional Auctioneers and Valuers, said the overall 2.3 percent increase is a blip that masks a range of problems underneath.
Pat Davitt, IPAV’s Chief Executive said while the CSO Index is based on stamp duty returns IPAV’s own study of actual prices achieved by auctioneers in the first six month of the year indicates that for the three bestselling property types - three and four-bed semis and two-bed apartments found when compared with the previous six months, there has been a drop of 1.34 percent for three bed semis and 1.68 percent for four bed semis. Two bed apartments have, on the other hand, seen an average increase of 1.35 percent, with the cities of Cork, Galway and Kilkenny experiencing a much higher increase for this property type.
He said it is still the case that second-hand properties in many areas of the country can be bought for less than the cost of building the same property. In some areas the difference is substantial.
“What is more worrying is that while dwelling completions in the second quarter of the year were up 11.8 percent, there was a marked decline of 29 percent in dwelling commencements. That is likely to mean a lack of confidence among many builders and developers and it’s likely that the number of completions for the year will struggle to reach 20,000 even though demand is still strong,” Mr. Davitt reflected.
IPAV has called on the Minister for Finance to support that the 3.5 times loan-to-income threshold for mortgages be increased to 4.5 times income, to ensure those on lower incomes who can afford mortgage repayments are able to access mortgage finance and not be forced into the rental market where rents far exceed the price of servicing a mortgage.
Mr Davitt said the outcome of IPAV’s price study would appear to indicate that the mortgage rules are pushing buyers to purchase apartments.
“For those on incomes of €30,000-€50,000 it is practically impossible to buy any form of property even though they can well afford to,” Mr. Davitt concluded.