In the immortal words of Elvis Presley, “we’re caught in a trap”.
And you could be forgiven for having a suspicious mind as to where the current property market is going.
Yesterday’s latest residential property price index from the CSO revealed that prices had risen by 7.3% for the year to September.
While in the past Dublin and the major urban areas have been driving such increases the issue of rising prices is now widespread. Digging deeper into the latest figures revealed prices were up 15% in the Midlands and 12% in the west of the country, with the average price for a property nationally now €235,000 and €383,000 in the capital.
While current prices are still 33.1% off their peak of around a decade ago, many people fear that another bubble may already be upon us.
Already experts are predicting that prices are set to rise further and it’s difficult to counter that given the fact that demand still far outweighs supply.
Turning things around from here will be difficult though in a market where €9.2 billion has been spent on property so far in 2016 according to stockbroking firm, Davy.
The high rents that are being asked for around the country are attracting more investors into the market, with data from estate agents Savills revealing that 29.1% of all houses bought in Dublin in the last year were by investors.
The fact investors now make up almost a third of an already small and saturated market is putting even more of a squeeze on regular purchasers though, in particular first-time buyers.
Leaving aside the fact that they are finding it increasingly difficult to meet the deposit rules set down by the Central Bank due to the rising cost of homes, those who are successful in buying are taking on higher levels of debt because homes are now much dearer than they were when those very rules were introduced.
Indeed, the average asking price for a house nationally is now €15,000 above the €220,000 window whereby a 10% deposit is required from a first-time buyer.
We’re caught in a trap at present, or at the very least a vicious circle. People are renting because they cannot afford to buy but they cannot afford to buy because they are renting.
What it has resorted to is that people are back to buying off plans.
Most recently Cairn Homes sold 40 houses in the Marianella development in Rathgar off plans, taking in €27.2 million in the process. That worked out at an average price of €650,000 – a figure beyond most buyers.
Another Elvis song “If I Can Dream” is currently being used by the National Lottery in their adverts for their various draws. The way the market is at present and the way it is going, a dream is all home ownership will be to many people for some time to come.
Let us know your views on the matter.
- Are house prices becoming unaffordable again for the average person?
- Are you struggling to save for a deposit because of high rents?
- How much higher do you anticipate prices going in the next 12 months?
Have your say below…