The Irish housing market has been facing significant challenges, with soaring property prices that continue to outpace income growth.
House prices are rising at an alarming rate, with the latest figures from the Central Statistics Office (CSO) showing a 9.7% increase in property prices up to October, marking the 14th consecutive month of price increases.
Phillip Cullen is Director of Southeast Financial Services and speaking on Morning Mix he said that the average first-time buyer mortgage has now increased by over €24,000, reaching a new high of just under €320,000.
According to Cullen, the primary reason behind the rapid rise in house prices is a severe shortage of both new homes and second-hand properties. The imbalance between supply and demand is driving up prices, creating a tough market for potential buyers.
With property prices so far ahead of wage increases, many first-time buyers are struggling to afford a home. Phillip Cullen urges potential buyers to start planning early and to seek professional financial advice as soon as possible.
“You need to talk to a mortgage broker at least six months, preferably two years, in advance to get a clear plan in place. There are things you can do to improve your chances of getting a mortgage, like saving for a larger deposit and understanding your financial situation.”
First-time buyers can benefit from government schemes such as the Help to Buy and First Home Scheme, which provide additional financial support. These schemes, combined with changes in banking regulations in 2022 that allow buyers to borrow up to four times their income, have made it easier for some to secure mortgages. However, these measures still aren’t enough to keep up with the rising property prices.
With mortgage repayments becoming more expensive, Cullen offers some important advice to ensure borrowers stay financially secure. First and foremost, he recommends not borrowing more than you can afford.
“Banks will lend up to four times your income, but it’s important to ensure that your income remains steady. It’s crucial to stick within that limit and make sure you have a steady income that can support your mortgage repayments,” he said.
Cullen also advises buyers to save as much as possible for a deposit, as a larger deposit can help secure better mortgage terms. While government schemes may offer some relief, buyers should still demonstrate financial responsibility by saving regularly.
Cullen also highlighted the issue of population growth, particularly in areas like Wexford and Gorey, where the demand for housing has dramatically increased. The population in Wexford has risen by 9.2% over the past six years, yet housing stock has only increased by 5.6%. In Gorey, the population growth has been even more significant, but the supply of housing has not kept up.
“This imbalance is exacerbating the housing crisis,” Cullen noted. “As more people move into these areas, the demand for housing continues to outstrip supply, pushing prices even higher.”
