First-time buyers in Ireland are taking on more debt in relation to their incomes than at any point since the Celtic Tiger era, according to a new report by property website MyHome.ie in association with Bank of Ireland. The report reveals that the average mortgage loan for a house purchase has surpassed €300,000 for the first time, marking a 7% increase compared to the previous year.
Annual asking prices for homes also rose by 8.4% last year, and homes are now being sold for an average of 9% above the asking price. The report indicates that one in seven homes is selling for as much as 20% above the asking price. According to data from the Central Statistics Office, sale prices have increased by almost 10% in the last 12 months.
Conall Mac Coille, Chief Economist with Bank of Ireland, stated that despite affordability becoming more strained throughout 2024, house prices have yet to soften. “Demand is still fierce in the market and indeed has strengthened as the year has gone on,” he said, highlighting the continued competitiveness in the housing market.
The report also revealed that first-time buyers are borrowing more than they did in previous years. In the first half of 2024, first-time buyers took out loans worth 3.37 times their annual income, up from 3.25 times in the same period of 2023. This shift follows the Central Bank’s decision to loosen mortgage lending rules, allowing first-time buyers to borrow up to four times their income. In the first half of last year, half of first-time buyers had loans close to this upper limit.
Mr. Mac Coille suggested that the European Central Bank’s rate cuts would help support house prices. However, he warned that limited housing supply could offset any potential improvements in affordability as buyers compete to secure homes. He is forecasting a 4% increase in house prices this year, though he acknowledged that this prediction might be too conservative given current trends.
The report also highlighted a shift in the age of first-time buyers, with the average purchaser now aged 36, compared to 34 just four years ago. This trend reflects the increasing financial pressure on younger buyers as they enter the market later.
On the rental front, the report noted a cooling in the rate of price increases in Dublin, where rents rose by 2.5% over the past year. Outside the capital, however, rents surged by 8.9%, indicating continued affordability challenges in many parts of the country.
