Responding to the CSO Residential Property Price Index for September, IPAV, the Institute of Professional Auctioneers and Valuers, said while a correction in Dublin prices has been underway following recent rapid rises properties in rural Ireland are still selling for less than the cost of building them.
Pat Davitt, IPAV’s Chief Executive said first-time buyers are being priced out of the market.
“While those on high end salaries can afford to buy, those on average wages are in real difficulty.
“Many on incomes of €30,000 to €50,000 would be in a position to service a mortgage but are stymied by the 3.5 times loan-to-income limit on mortgage lending.
“We believe the loan-to-income threshold for mortgages should be increased to 4.5 times income, to ensure those on lower incomes and who are paying high rents but could well afford mortgage repayments are able to access mortgage finance and not be forced to stay in the rental market where rents far exceed the price of servicing a mortgage,” Mr. Davitt said.
However, Mr Davitt added, given comments this week from the Central Bank and correspondence received by IPAV on the lending rules the situation is unlikely to change under the current review.
“If this is what transpires it will, in time, be seen as a mistake,” Mr. Davitt remarked.
He said overall the Central Bank mortgage rules play an important role.
“However, they do need some tweaking in our view. They are having too severe an impact on first-time buyers and those with less family resources to help with a mortgage,” he concluded.