As house prices continue to escalate with the recent CSO House Price Index showing an annual increase in February of 16.8 per cent for properties outside Dublin and 13.5 per cent in Dublin, Brokers Ireland has said the market is almost back to the level house prices reached at peak in 2007 - with prices outside of Dublin just 3.9 per cent short of where they were then - and Dublin just over 10per cent behind peak.
Rachel McGovern, Director of Financial Services at the organisation which represents 1,225 Broker firms said, however, a lot has happened in the weeks since the beginning of the year when these prices would have been recorded, with the war in Ukraine and rising inflation.
"Therefore, it is hard to see these levels of increases maintained over the next six months or so, with a dip in consumer sentiment already being recorded, along with the prospect of an increase in interest rates towards the end of the year," she said.
But she stated that more supply was needed to keep house prices from continuing to inflate.
"In this regard it is worrying that there was a drop of 0.5pc in the number of new dwelling completions in 2021 compared with the previous year, bringing the number to 20,433, and a drop of 5.3 per cent in Q4.
"While house prices have surged, competition in the mortgage market, despite the exit of KBC and Ulster Bank, has brought better mortgage products for consumers with fixed rate repayments still at historically low rates and now available for periods of up to 30 years.
"However, it’s getting late for many aspiring house buyers. Many have already been squeezed out by overly strict macroprudential mortgage rules introduced in early 2015 when house prices were much lower.”
Ms McGovern said there is a “forgotten generation” of aspiring home buyers for whom the lack of access to mortgage finance is weighing increasingly more burdensome.
"A delay of say 10 years in getting a mortgage, many have been halted since the financial crash, means a shorter mortgage term, and higher monthly repayments impacting affordability.
"While repaying a mortgage over a shorter term costs less overall the month-on-month repayment is higher and can negatively impact affordability."