Trading up? You’ll now need a deposit of €135,000

Putative first time buyers will need to earn almost €3,000 more a year to secure a mortgage for their first home, while those in Dublin will need to earn €5,265 more than they needed this time last year, with latest figures showing a substantial increase in the incomes required to draw down a mortgage. Meanwhile those looking to trade up in Dublin will now need to be able to fund a median deposit of some €135,000.

According to the latest Housing Market Monitor from the Banking and Payments Federation of Ireland (BPFI), the median income of first-time buyers who bought a home in the third quarter of the year was 4.1 per cent higher than it was at the same time last year, at €69,000. And Dublin FTBs needed larger incomes again to secure their first home, with a median income of €81,000 reported in the third quarter, up by 6.5 per cent on the year. The rate of growth was also strong in Cork/Galway/Waterford and Limerick, as median incomes rose by 5.5 per cent to more than €65,000. Incomes remained stable in the Dublin commuter region however, at €70,000, up by 0.6 per cent year on year.

The figures, which refer to joint income, are based on loan data, and therefore refer to homebuyers who have successfully bought a home and drawn down a mortgage during the third quarter.

FTBs also needed substantially larger deposits to buy in the three months to September than they did at the same time in 2017. The survey shows that the median deposit for a FTB rose by 5.5 per cent on they year to €37,000, while the figure needed for Dublin stood at €52,000. However, the figure for Dublin fell by almost 1 per cent over the year, and is some way off previous highs of about €56,000. Rather than indicating a softening in house prices however, the fall in deposit needed could be a result of a change in Central Bank mortgage lending rules back in 2017, with more FTBs now able to borrow 90 per cent of the value of their home.

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The median FTB deposit rose by 5.7 per cent in the Dublin commuter region, up to almost €40,000.

Trading up

The figures also show that the median income of homebuyers who successfully purchased their second or subsequent home during the third quarter breached €100,000. A 1.5 per cent year-on-year increase in the median income of borrowers looking to trade-up pushed the median income level up to €101,000 for the third quarter of the year. In Dublin, homeowners who traded up had greater incomes, of €121,000, up by 0.2 per cent on the year.

And the challenge in raising a 20 per cent deposit, which is required by most second and subsequent buyers under the Central Bank rules, is evident in the scale of deposits needed by those looking to trade up. According to the figures, those looking to move on in Dublin had a median deposit that was up by 8 per cent on 2017, at €135,000, while the deposit needed in the areas surrounding Dublin rocketed by 16.3 per cent to €87,200.