Archives August 2023

July saw a 22pc rise in the number of new buyers borrowing compared with last year

Rising numbers of first-time buyers are being approved for mortgages despite a sharp slowdown in the wider home-loan market.

Latest figures from the banks show a 22pc rise in the number of new buyers getting the green light to borrow in July compared with last year.

This is despite a surge in mortgage rates after a succession of European Central Bank rate rises and a cost-of-living crisis that is squeezing consumer budgets. Typical fixed rates are now around 4pc.

There was a 10pc fall in the overall numbers cleared for a home loan.

A collapse in the number of switchers had dragged overall mortgage-approval numbers down, the Banking and Payments Federation Ireland (BPFI) said.

Last month, banks approved a total of 4,747 mortgages. First-time buyers got 2,918 mortgages. This works out at six out of 10 of the overall numbers approved for a loan to buy a home.

Mover-purchasers accounted for 1,148 approved, or 24.2pc.

The overall number of mortgages approved fell slightly in July compared with the previous month, but was down 9.7pc on the same period last year.

Mortgages approved in July were valued at €1.35bn. First-time buyers accounted for €837m of this, with mover-purchasers accounting for €391m.

The value of mortgage approvals remained the same month-on-month but fell by 6.7pc over a year.

But there has been a huge fall in switching activity as mortgage hikes, particularly those from non-bank lenders, have made moving mortgage provider less attractive.

Remortgaging or switching activity fell by 78.6pc in volume terms year-on-year, and by 80pc in value in the same period.

New-buy activity is being boosted by the State’s Help to Buy and First Home schemes, and by banks offering lower-rate “green mortgages” that apply to newly-built homes.

The average first-time buyer was approved for a mortgage of €287,000 in July, up €10,000 on the average for the same month last year. This reflects rising property prices.

Ali Ugur, chief economist of the BPFI, said that the mortgage approval figures showed that, despite a wider market slowdown, first-time buyer activity remains strong.

He said it was the fifth successive month in which first-time buyer mortgage approvals had risen in year-on-year terms.

“This sustained growth meant that almost 30,000 first-time mortgages, valued at nearly €8.4bn, were approved in the 12 months ending July 2023, the highest annualised levels since the data series began.

“In addition to the more than 22,000 Help to Buy applications reported by the Revenue Commissioners up to the end of July, these approval figures demonstrate that the pipeline for FTB mortgage drawdowns remains very strong.”

Mr Ugur added that, in the last year, the value of mover-purchase approvals was close to €3.9bn, the highest value since the series began.

“However, this in part reflects rising average mortgage values, with the average mover-purchase approval exceeding €340,000 for the first time, at €340,957 in July 2023,” he said.

Overall, there were 55,246 mortgage approvals in the year to July, valued at €15.4bn.

European Central Bank rates have risen nine times since last year, with the three main banks pushing up their fixed rates by around 1.5 percentage points over that period.

The interest rate on new mortgages has hit its highest level in years and is expected to rise even more in the coming months.

At 4.04pc, the average interest rate on a new mortgage in Ireland rose significantly from 3.84pc in May, according to the most recent figures from the Central Bank.

The 0.20 percentage point jump on the average in June was the second biggest increase in the Eurozone.

Soucre: Charlie Weston, Irish Independent, 25th August 2023

Buyers are being forced to pay more for homes despite a fall in transactions in the market over the last year.

New figures based on the State’s Property Price Register show that the typical price of a home was up €28,000 in the second quarter of this year compared with the same period last year.

The median, or typical, price is now €318,000, according to data technology company Geowox.

This means sales prices were up almost 10pc in the three months to June compared with the same period last year.

A total of 13,378 houses were sold between April and June. This was down 4.8pc when compared with the same period last year. This amounts to 672 fewer residential property sales. ​

Just 2,466 of those sales were for new homes, Geowox’s analyst Marco Giardina said in a report.

The data shows a bigger rise in new home prices than those for second-hand homes. This is in keeping with Central Statistics Office property price index figures.

Geowox said new homes had a typical price of €410,000 in the second quarter. This is up 9.3pc in the past year.

Just two years ago, a typical new home was selling for €345,000.

New home sales are being boosted by two state schemes for new buyers, the First Home scheme and the Help-to-Buy scheme.

For second-hand homes, the typical sales price was up 5.5pc in the past year to €290,000. This is up from €240,000 in the second three months of 2021.

Wicklow is the most expensive county, with typical prices for a home of €425,000. Buying is far less expensive in the north-west counties, where prices range from €150,000 to €185,000, the Property Price Register shows.

Leitrim has the cheapest houses, with a median price of €150,00. Roscommon is not far off with a median sales cost of €160,000.

Cork and Galway are at the other end of the scale. In Cork the typical sales price is €306,000, with Galway homes selling for €290,000.

Around county Dublin and its commuting counties of Wicklow, Meath and Kildare, prices are higher than the national median.

Prices nationally have been shooting up since 2013, when the median price of a residential property was around €130,000.

As recently as the second quarter of last year, the typical price was €290,000.

Every county experienced a rise in property prices with the exception of Clare. Typical prices in Laois have surged by 22pc when compared with a year ago. In Longford, prices shot up by 21.4pc.

In Tipperary, Louth and Mayo prices jumped by between 15pc and 16pc.

In the capital, there were big jumps in prices in the Dublin 1 and 2 postcode areas. Dublin 6 had a 28pc fall in prices in the last year.

The typical price for an apartment is now €270,000, up from €166,000 in 2016. For houses, the median price is €328,000, up from €186,000 in 2016.

Source: Charlie Weston, Irish Independent 4th August 2023

Sort It: Regardless of the budget, there will always be areas that will need to be scaled back

Making your home renovation dreams come true can be a challenge, especially when your budget doesn’t quite align with your wishes. We all have that wishlist of improvements we would love to make, but sometimes reality forces us to make compromises. We all feel we could do more if we had more money, but the truth is, regardless of the budget, there will always be areas that will need to be scaled back. The key is to be realistic and invest in the areas that will enhance your quality of life. Here are some helpful tips to navigate this process and ensure you make the most of your budget.

Cost

Be realistic about your financial situation. Take the time to research and understand the costs of the home renovation project you plan to undertake. While it may be tempting to rely on the experiences of family or friends who have completed similar work, keep in mind that their projects might have been done a long time ago. Furthermore, people often downplay costs to make it appear as though they received a great deal. So, instead of relying solely on others’ experiences, gather information from reliable sources and professionals in the industry.

When planning your renovation, don’t forget to consider the additional costs associated with refurbishment and building. It’s not just about the new extension; you need to factor in the expenses involved in integrating the existing structure with the new addition. Will there be any other work required, such as plumbing or electrical upgrades? These hidden costs can quickly add up, so it’s important to account for them from the beginning.

Non-negotiables

Identify the elements you refuse to compromise on. These aspects typically have a lasting impact on your daily life and overall satisfaction with the project outcome. Quality is often a non-negotiable criterion for many homeowners as it directly influences the aesthetics, functionality and longevity of the finished product. A well-executed, high-quality finish can elevate your living experience and add value to your property in the long run.

Layout

The layout of your home is another crucial aspect you shouldn’t compromise on. Investing time and effort into getting the layout right can save you money in the long run.

Consider how you use your space and how it can be optimised to better suit your needs. Simple changes, like opening up the kitchen to create a more sociable and functional area, can have a significant impact without breaking the bank.

Energy efficiency

Improving your home’s energy efficiency is another area worth prioritising. While it may not be the most glamorous aspect of a renovation, investing in insulation, heating systems and high-quality windows is a wise choice. These improvements not only enhance your comfort and quality of life but also contribute to long-term energy efficiency and cost savings. Prioritise these essentials to create a comfortable and sustainable home environment.

Trade-offs

Making significant savings may involve sacrificing speed, as cutting costs often requires allocating fewer resources to the project. This can lead to a longer timeline, with tradespeople fitting your project in between other commitments. While this may extend the duration, it can be a reasonable trade-off if your budget is a primary concern.

Budgeting

Think ahead and spend on elements that will be costly to replace or upgrade in the future. For example, investing in durable flooring, quality kitchen appliances or well-constructed cabinetry can save you from costly replacements down the line. By making these wise investments now, you’ll avoid the need for costly renovations in the near future.

Patience

Remember, you don’t have to do everything at once. Prioritise your renovation goals and tackle them in stages. By breaking down the project into manageable phases, you can spread out the financial burden and give yourself time to save for each stage. This approach allows you to enjoy the process and appreciate the progress as your home transforms over time.

Planning

No matter which compromises you decide to make, effective planning and communication are vital to ensure the smooth execution of your project. Set clear expectations from the outset and establish open lines of communication with your contractors and tradespeople. Discuss your priorities and non-negotiables, and strive for transparency regarding timelines, costs and quality expectations. Doing so minimises the chances of misunderstandings and fosters a collaborative environment that aligns with your goals.

Unwise compromise

While compromises are often necessary, certain scenarios should serve as red flags, warning against sacrificing certain criteria. Quality should rarely be compromised, as it directly impacts your long-term satisfaction with the project. Cutting corners or accepting poor workmanship can lead to costly repairs, replacements and ongoing dissatisfaction.

When it comes to the safety and structural integrity of your home, compromising is never advisable. Ensuring compliance with building regulations and engaging experienced professionals are essential for a successful project. Prioritise the structural soundness of your home and the wellbeing of your family above all else.

Source: Denise O’Connor, The Irish Times, 07/07/2023