IPAV notes current impact of mortgage regulations on property buyers market

Commenting on the most recent CSO Residential Property Price Index for September IPAV, the Institute of Professional Auctioneers and Valuers, said while the number of dwelling purchases in September was up on August the level of transactions at 3,193 is “paltry” with just over 19 percent of these being new dwellings.

Pat Davitt, IPAV Chief Executive said the lack of supply of properties is an issue, along with affordability and with lenders acting in a severe risk averse way.

“The reality of the market, however dysfunctional it remains, indeed perhaps because of it, is that up to 60 percent of purchasers can buy without mortgage finance.

“There is a scarcity of property hardly seen in Ireland before. Agents the length and breadth of the country report there are lots of buyers seeking properties,” he said.

And he said while affordability is an issue in urban areas properties outside of these areas are still cheap but the Central Bank macroprudential mortgage rules are far too severe on the lower paid.

“Aspiring buyers know that outside of the Greater Dublin Area and its suburbs prices are generally still cheap. Interest rates are low; fixed mortgages, albeit higher than the euro area average, are now available for up to 10 years; rents are higher, much higher in most areas of the country, than mortgage repayments, and there is housing stock available,” he said.

He pointed to the recent Daft.ie rental report which shows rents in areas like Carlow, Galway county, Roscommon, Donegal and many more areas where rents are almost double the cost of servicing a mortgage for the same properties.

“Even allowing for a two percent hike in mortgage rates, which is not on the horizon, it is still substantially cheaper to service a mortgage.

“The mortgage rules may be satisfying regulators but they are not working for aspiring home buyers on average wages,” he said.

He also said the Housing Commission promised in the Programme for Government needs to bring all elements of housing policy together.

“Isolated interventions that have not been fully thought through have been the bane of the property market in recent years and have brought about severe unintended consequences.”


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