€20,000 in extra debt for first-time buyers as mortgages return to Celtic tiger peak

Soaring property prices have pushed the amount people need to borrow to secure a home to levels not seen since the Celtic Tiger bubble.

First-time buyers now borrow an average of €250,000 to access the property ladder.

This is nearly €20,000 more than last year, according to figures from the Federation of Banking and Payments.

And that’s the highest level since early 2008, the peak of the Celtic Tiger housing bubble.

If moving mortgages are included, the average mortgage drawdown is now €263,000.

That’s an increase of almost €18,000 since the start of last year, and it’s the highest average drawdown figure since the height of the Tiger Bubble.

The most recent figures from the Central Bureau of Statistics show house prices are down just 2.5% from their highest level in 2007.

A chronic shortage of homes to buy means prices are rising at a rate of 15% per year.

Figures show that a total of 9,910 new mortgages worth 2.5 billion euros were drawn down by borrowers in the first quarter of this year.

This is an increase of 9% compared to the same period last year.

Irish Federation of Banking and Payments chief executive Brian Hayes said: “These increases reflect very well the upward trend in the average house price, which is due to the lack of supply in the market.”

Separate figures show nearly 5,700 new homes were completed in the first three months of this year.

Around 70% of housing completions in Dublin were flats, according to figures from the Central Statistics Office.

And statewide, about 20% of housing completions in the first three months of this year were single homes.

Lecturer in housing at Dublin’s Technological University, Lorcan Sirr, said housing production was up, but fewer houses were coming to market.

Large institutional investors were at the origin of large apartment programs, these being only offered for rent.

Dr Sirr said that although there has been a 43 per cent increase in overall housing supply since 2017, the number of new homes coming on the market for sale has fallen.

It has fallen from almost half of all production in 2017 to just 28% last year.

“There were only 5,698 new homes built for sale last year out of a total of 20,433 new homes,” he said.

Increases in supply were mainly attributable to social housing and new apartments under construction for rental.

“That means there are fewer new homes for first and second time buyers to buy,” Dr Sirr said.

When asked if we were heading for another housing crash, the housing speaker said Central Bank lending limits had stopped house hunters from borrowing too much and stopped banks from lending recklessly .

“Central Bank lending limits are the pin that keeps the grenade from exploding,” he said.

“If they were to be increased, people would simply have more money to compete with each other and the state which is also active in the same market.”

And Goodbody Stockbrokers economist Dermot O’Leary agreed that the big
number of apartments
the construction of rental housing and the buyout of social housing from builders meant that ‘the supply of owner occupiers will stagnate and possibly even contract this year in the context of a still high demand for first-time buyers’.

There have been 14,400 property transactions so far this year, with an average price of €360,000, according to house price register figures collated by Davy Stockbrokers Conall Mac Coille.

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