"A new house is out of reach" even for civil servants such as a garda and a nurse with ten years' experience; Buy-to-lets are becoming more popular

A case study based on a couple working as public servants, such as a garda and a nurse with ten years' experience, shows that an average priced new home is out of reach by tens of thousands of euros. 

The affordability gap for first-time buyers in Dublin, Wicklow, Meath and Kildare is less than €62,000. The gap in Galway is its €22,000. Case studies suggest the North West, Midlands and South East are the most affordable areas for first-time buyers. At the moment, new house building is most profitable in the Greater Dublin area, and in most cases new house building is least feasible in more affordable areas such as the Midlands and the North West.

According to the Society of Chartered Surveyors Ireland, a couple with a gross income of €89,000 cannot afford to buy an average three-bed semi-detached house in the Greater Dublin area. To restore balance to the property market, we need to ensure there is an adequate delivery of new housing through AHBs, the Land Development Agency and direct public housing delivery.

A new survey by the Society of Chartered Surveyors Ireland indicates that residential property prices will continue to stabilize in the medium term, with estate agents forecasting an increase of just 1% in 2024. Two-thirds (63%) believe property prices have either peaked and are about to start falling or are nearing a peak. The report found that housing supply, interest rates and changes in the economy are key factors influencing expectations of house price movements.

O'Sullivan said it now appears that prices are set to consolidate in the medium term. SCSI agents believe we will see moderate growth in values in what is likely to be another challenging year for the property market. Three-quarters of agents, or 76% of respondents, report a lack of supply to meet demand, up 10%. Last year, while inflation eased following a dramatic increase in interest rates, they were also underpinned by a lack of supply.

Prices fall below the current rate of inflation, which is a welcome development for potential buyers as their purchasing power increases as affordability improves. While the current supply of new homes is undoubtedly inadequate, SCSI agents say initiatives aimed at increasing supply are underway and the situation will improve in the coming years.

Buy-to-lets

SCSI's annual Residential Review and Outlook report also found that one in three properties coming onto the market are buy-to-let. 36% of landlords are selling their investment property. Although this is 4% less than last year, it shows that investors and landlords are continuing to exit the market in very significant numbers.

A buy to let mortgage is designed for individuals who want to buy a property to rent. Typically, these mortgages are interest-only, meaning your monthly repayments are only the interest on the loan, not the principal. It is critical to have a plan for repaying the mortgage at the end of the term, which may include using savings, selling the property, or refinancing with another mortgage.

“Despite the implementation of new tax measures announced by the government in Budget 2024 aimed at encouraging landlords and investors to stay in the market, rental units continue to come onto the market. There has been a steady increase in the proportion of SCSI agents reporting no sales.