New demand for property by first-time buyers is expected to drive market growth in the coming year. Real estate agents are expecting a rise of nationwide following the new regulation changes.
Nationwide market increase
According to a survey from the Real Estate Alliance Group (REA), estate agents around the country are predicting prices in Dublin to beat the national average, with a rise of around 7 percent. From the start of 2016, the market in Dublin went into decline as the surge in rents, harsh mortgage regulations and a lack of property hit the country. With the new relaxed restrictions on mortgages for first-time buyers, and the government help-to-buy scheme, more first timers will be able to get on the property ladder. In addition, as there is still a distinct shortage of suitable property, this should push the prices back up again.
Bright start
With the increase in approved first-time buyers, combined with the short supply, REA agents are predicting a bright outlook for the first quarter of 2017 in the lower end of the market. A 6 percent rise in property prices is expected nationwide, with areas like Galway and Limerick increasing as much as 10 per cent.
High end is low
There is a lot less expectation for the higher end of the market, though. There are still serious issues surrounding the income multiplier and the stagnant deposit rates for second time buyers looking to move to bigger properties. Many homeowners will be left with no choice but to stay put as the rules on deposits and income limits were not changed in their favour.
Cautious for commuter areas
For the commuter region, surrounding the capital, the outlook is “cautious” according to the REA. Agents have predicted a rise of just 3.8 percent with fears that the market may already have peaked. Moreover, in Navan and Kells agents are expecting no growth at all, without any new residential development in the area. However, there is an overall confidence in a positive market reaction where there are new development areas.
Supply not meeting demand
REA chairman, Eamonn Spratt, said, “The easing of the Central Bank restrictions has given the market great short-term hope, but the real problem in the property lies in supply.” Whilst the estate agents are pulling people into the property market again, there is no long-term housing plan in place to provide suitable properties. Builders and developers are reluctant to invest in properties with an initial sale price lower than 200,000 Euros. “Until that point, unless there is state intervention on supply financing, we will not see sustainable building in areas where the average is below that point,” Spratt pointed out.
Economic concerns
The lack of new property in the country could be a cause for economic concern. In some areas, employment is increasing due to new business, but the property is not there for the increase in population, with new employees moving in. Despite all the predictions of a good year and increased market prices, the industry could still be set for a fall if new development is lacking.
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