The average three-bed semi in South County Dublin has seen €15,000 wiped off its value in three months as the new deposit rules stifle the higher end of the market, according to a national survey carried out by Real Estate Alliance.
And spiralling rents will cut off mortgages as an option for many young couples unless the Central Bank revisit their deposit rules, raise exemption limits and include second-time buyers, according to REA.
Just as many couples cannot afford to get on the housing ladder, second-time buyers cannot move and free up cheaper properties for new entrants and causing a logjam in the capital.
While the average house price in Dublin city and county has fallen by over €5,000 in the past three months, South County Dublin has been the hardest hit in the country, with prices falling by -4.17% since the end of June.
The average semi detached house nationally now costs €188,102, the Q3 REA Average House Price Survey has found – a slight rise on the Q2 figure of €186,968.
The REA Average House Price Survey concentrates on the sale price of Ireland's typical stock home, the three-bed semi, giving an up-to-date picture of the property market in towns and cities countrywide to the end of September.
The price of an average three-bed semi in Dublin city and county has fallen by -1.47% from €339,500 to €334,500 since the end of June.
“Our agents on the ground in Dublin are reporting a growing withdrawal of couples aged between 25-40 from the market due to the new mortgage deposit regulations,” said REA Chief Executive Philip Farrell.
“When the Central Bank introduced the new rules, they stated that they could revisit them, and we believe that they need to do so as a matter of urgency.
“We believe that the new borrowing requirements are exceeding their desired affect and are now starting to prevent the market from functioning in a cohesive manner.
“We propose that the price ceiling for first-time buyers should be extended to €330,000 – in line with the average values in Dublin and secondly, second-time buyers should be assisted by allowing them to borrow 90% up to €220,000 as the current requirements are too prohibitive.
“Falling house prices are not a sign of success or affordability, they are falling because young people cannot afford to qualify for a mortgage, and second-time buyers cannot afford to move out of houses in the €220,000 band.”
Rising rents have had a huge effect on the Dublin market according to Anthony McGee of REA McGee in Tallaght, where prices have dropped -4.3% to €220,000.
“A typical couple are now being expected to pay rent of €1,200 a month on a two-bed apartment in Tallaght.
“When you combine this massive rent with childcare and other expenses, there is very little chance that people will then save the 10/20% deposit required on a property.”
Prices in North County Dublin have decreased by -1% to 247,500 and Dublin city by -0.83%.
There has also been an increase of 5% in the amount of cash buyers (34%) in the Dublin city market, reversing an 18-month trend that has seen mortgage buyers increase.
The average three-bed semi price rose by 0.71% to €206,676 in Tier two – the commuter counties and the larger cities over the three month period.
“Average properties in the extremes of the outer commuter belt also felt an increase in Q3, with Kilkenny rising by 5.45% to €145,000 and Westmeath growing by 4% to €130,000 – both figures well inside the first-time buyers threshold,” said Philip Farrell.
“However, in previously growing areas such as Cork and Galway cities, the market is flat due to prices being over the first-time buyer threshold.
Prices in the rest of the country grew by 2.70% in Q3, to €120,786.
The biggest upward movement in prices over the past three months have come in Roscommon (+8.33% to €65,000), Cavan (+7.79% to €70,000) and Monaghan (6.36% to €117,000) – counties operating off a low base that have not previously felt the benefit of the property uplift that took hold in 2014.
Real Estate Alliance (REA) is Ireland’s leading property group of Chartered Surveyors with over 55 branches nationwide, comprising many of the country’s longest-established auctioneers and estate agents.