THE FALL in property prices is now significantly steeper for first-time buyers than for existing homeowners, revealing that potential buyers remain nervous about signing any property deeds. The Permanent TSB / ESRI house price index shows that the gap in the prices paid by first- and second-time buyers has widened over the past year. The average national price paid by first-time buyers for houses and apartments fell 14 per cent last year – compared to a decline of 7.8 per cent on second-time buyer prices.
The average price paid for a house by a first-time buyer stood at €224,153 in December 2008, down €36,633 from €260,786 in December 2007. “Really the power is with the buyer at this stage. Time is on their side,” said Permanent TSB’s Niall O’Grady.
European Central Bank (ECB) interest rate cuts, as well as the decline in prices, have improved affordability for first-time buyers, but labour market uncertainty and the desire “not to be the person who buys a house at €300,000 and the next week it’s €290,000” mean potential buyers are avoiding the market.
A 7 per cent annual fall in rents, according to data from the Central Statistics Office (CSO), is also persuading buyers to hold off, while the removal of 100 per cent mortgages from the market mean that buyers need to have a 10-20 per cent deposit.
