The housing market in Ireland has been a challenge for potential homeowners seeking to purchase their first home. There are several factors that impact first time buyers in the housing market in Ireland. One of the major challenges that first time buyers face is the limited housing supply in the market. This has been a challenge for many years and has led to a significant increase in house prices. This makes it tougher for first time buyers to purchase as they may not have enough funds to compete with other buyers. Many construction companies have been limited by funding issues and delays within the planning process for new projects. This leaves fewer new homes available in the market and it also drives up the cost of such homes.
However, the Irish Government has rolled out several initiatives to assist first time buyers.
The Help-to-Buy scheme is one of the notable programmes which has been designed to assist first-time buyers to purchase a home. This scheme grants first time buyers a tax refund of up to €30,000, which they can use as a deposit for purchasing a property.
The First Home Scheme which aims to bridge the gap between what the first-time buyer is entitled to borrow from the bank and the purchase price of a new home. This scheme facilitates a low interest loan of up to 30 per cent of the purchase price of a new property. This loan does not have to be repaid until the property is being sold.
A Local Authority Home Loan is a Government backed mortgage for first time buyers and Fresh Start applicants through local authorities. The scheme is for the purchase of new or second-hand properties and for self-builds. With this scheme you can borrow up to 90 per cent of the market value of the property.
Loan offers are also more available as banks offer different types of loans to first time buyers, often with lower interest rates compared to standard home loans. This is significant as European Central Bank rates have been steadily increasing since the summer of 2022. New Central Bank rules which took effect in January 2023 allow first-time buyers to borrow up to four times their gross income. It is essential that this is subject to an "ability to pay" test that mortgage providers have become more cautious with lending.
Purchasing a home in Ireland is not an easy task, especially for first time buyers. However, with Government initiatives such as the Help-to-Buy Scheme and the First Home Scheme, it can be more affordable, enabling first time buyers to have an opportunity to step onto the property ladder.
Ronan Murphy is a partner with Berwick solicitors.
