Commenting on the most recent CSO Residential Property Price Index for April, IPAV, the Institute of Professional Auctioneers and Valuers, said while there is a large drop in the number of dwelling purchases, 34.7 percent on the previous month, there is very little indication that property prices will drop.
Pat Davitt, Chief Executive of IPAV said, however, since the figures are based on Revenue stamp duty returns which have a 44 day submission deadline, there is some way to go before we know what impact if any the COVID-19 pandemic will have.
“It would appear at this stage that the market is pretty resilient with house prices in the West up 5.8pc and the Border region up 4.4 percent in the year to April,” he said.
And he pointed out that prices are still around 22 percent below prices at the peak in 2007.
“Post the pandemic it may well be that we see some re-balancing of house prices between city and country as more people opt to live in rural areas and work from home, at least part-time,” Mr. Davitt remarked.
Government must assist access to second-hand residences
Meanwhile, in response to the Irish Banking and Payments Federation analysis that new housing completions could drop to between 14,000 to 16,500 units for the year the IPAV CEO has said it underpins the need for the new Government to increase access to second-hand homes for first-time buyers (FTBs ) in particular, as demand for homes will remain strong.
“It is extremely difficult for many FTBs to acquire new homes that typically sell at between €260k and €300k.
“However, throughout the country there are broadly similar second hand homes available for much lower prices, typically €170k to €250k. And there is a good supply of housing stock in this price bracket,” he said.
Mr Davitt said IPAV has proposed to the Minister for Finance that the Help-to-Buy scheme should be extended to include second-hand homes.
“It’s encouraging see in the new draft Programme for Government that it is hoped to retain and expand the Help-to-Buy scheme. It is to be hoped that this expansion will be to include second hand homes,” he said.
The Help-to-Buy scheme provides a tax refund to help FTBs get the deposit needed to buy a newly built home or a self-build, up to a maximum value of €500k. Five percent of the value of the property or €20k, whichever is lower, can be claimed.
He said those on incomes lower than €50k but with good repayment capacity are also “locked out” of the home buying market because of the severity of the Central Bank mortgage lending rules, in particular the 3.5 times income limit.
“This is starkly highlighted in today’s IBPF analysis, which shows that only 17pc of FTBs are in this income bracket.”
He said IPAV in a submission to the Dáil Covid-19 Committee proposed that the Central Bank should be strongly urged to adjust these guidelines for earners in the lower income cohort of up to €50K to 4.5 times their income. This would give them an increased possibility of owning a home and hence also helping the rental situation as most of these FTBs will be moving from rental accommodation.
Mr Davitt said home ownership is vital to the growth in personal wealth over the long-term. “That is particularly so in an Irish context where our system is based on the assumption that people will own their own homes by retirement age as social policy analyst, Professor Tony Fahey of UCD, amongst others, have pointed out.”
CSO data shows the number of owner occupied households fell between 2011 and 2016 (from1,149,924 to 1,147,552 ) causing the overall home ownership rate to drop from 69.7pc to 67.6pc, a rate last seen in 1971.
