Investors have been almost driven out of the housing market in stamp duty and the tax on investment properties introduced last July, according to Irish Permanent and the ESRI. The figures in their survey also showed the first monthly slowdown in house price growth since January last year.
According to Irish Permanent, speculative investment in the £100,000-£150,000 (€126,974-€190,461) house price range has fallen from around 16 per cent at the beginning of the year to just 3 per cent in September. As a consequence, the number of first-time buyers in that price range has risen. The survey estimates that first-time buyers now account for around 55 per cent of the market, compared to just over 30 per cent at the beginning of the year.
Lending by Irish Permanent to first-time buyers throughout the Republic has risen from under 31 per cent of the total amount lent by the bank at the end of 1999 to 37 per cent in the year to date. In Dublin, the proportion of lending to first-time buyers has risen from 24 per cent to 30 per cent.
According to Irish Permanent, which claims to have almost 21 per cent of the mortgage market, the national average mortgage for a first-time buyer is now £79,000. The average loan for a second-time buyer is £65,000.
In Dublin, these figures are considerably higher, with the average for a first-time mortgage being £109,000 and, for a second, £77,000.
Irish Permanent managing director Mr Billy Kane said the company's loan-to-value ratio for mortgages has remained static for first-time buyers at 73 per cent. "This means that negative equity in Ireland is not a problem - not like in the UK in the 1980s when loans to value were 100 per cent or more," he said. Mr Kane said there was no evidence to suggest first-time buyers were borrowing to fund deposits for homes. Most first-time buyers were getting support from their parents and families to help them get into the market, he said.
The Irish Permanent/ESRI index also showed that house prices nationally had risen by 15.3 per cent in the nine months to the end of September. In Dublin, the price rise figure was 17.1 per cent.
Mr Kane said the full-year growth in house prices was likely to be 18 to 19 per cent.
Irish Permanent did not make forecasts for price growth next year, but spokesman Mr Diarmuid Bradley said his "guesstimate" was that price growth might slow to around 10 per cent next year.
The year-on-year house price increase of 20.6 per cent in September disguised a slowdown in the rate of growth. The increase for the month itself was just 0.5 per cent, the lowest monthly increase since January 1999. That figure compared with a monthly rise of 2 per cent in August.
