Further evidence of an increase in property prices came to light this week with the news that Donegal had the second highest price increase for a four-bedroom semi-detached house in the second half of last year, according to the latest Residential Property Price Barometer.
It charts actual house prices achieved by auctioneers, for the most common family home types – three and four bedroom semi-detached houses and two-bedroom apartments - and compares prices for the first six months of 2020 with the second six months.
The largest increase in prices involved four bedroom homes.
In Donegal, it found that in the latter six months of 2020 four-bedroom detached homes increased in price by 5.16%. The only region that had a bigger increase was Galway City (5.87%).
During last year the average price of a four-bedroom semi-detached house sold in Donegal rose from €168,000 to €176,667.
Meanwhile, in Donegal the price of three-bedroom semi-detached homes in the second half of last year increased by 3.30% and two-bedroom apartments were up by 1.67% over the previous six months.
The average cost of a three bedroom semi-detached home in Donegal in the second half of 2020 stood at €156,667.
Pat Davitt, IPAV Chief Executive said when, in the late Spring and early Summer of 2020, notable economists and analysts across both the public and private sectors were predicting house price drops, some of the order of 20%, knowing the feedback from auctioneers the IPAV publicly questioned the rationale for such forecasts.
He said property valuations are crucially important because values impact, not only the balance sheets of lending institutions and pension funds but the financial security and immediate and future choices available to citizens.
Mr Davitt said it’s likely that housing demand will keep prices elevated for the foreseeable future.
“Just over a year ago the Central Bank estimated we will need to build 34,000 new homes every year up to 2030. Latest CSO data shows the 2020 figure for new builds was 20,676. So demand will continue to outstrip supply for some time.”
But supply is not our only problem, he said. “There is a huge issue around affordability, particularly for those on average wages of up to €45,000, many of whom by paying high rents have shown they can well afford to service a mortgage. They cannot get a mortgage because of the overly zealous nature of the Central Bank’s macro prudential mortgage rules.
“The 3.5 times salary cap in the Central Banks rules is not a high enough multiple to allow average wage earners qualify for a mortgage. The Government has already recognised this and allows 4.5 Loan to Income multiples in their Rebuilding Ireland Home Loan, available from Local Authorities. However as this loan is only suited to certain applicants, the Central Bank needs to follow suit.
“At a time when rental levels is most areas of the country remain substantially higher than mortgage repayments for the same property, it’s ironic that the Government has had to step in and extend the Help-to-Buy scheme and are now introducing a new Affordable Purchase Shared Equity scheme where the State will provide equity support to those seeking to buy new private homes but are unable to secure the full mortgage to do so.”
Mr Davitt said the setting up by the Government of the promised Commission on Housing is awaited. “It’s absolutely critical that this body would have input from all stakeholders, so that past mistakes can be avoided and the major impediments that remain to building sufficient homes are addressed,” he said.
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