New data shows the typical income of first-time buyers is now over €90,000 at a time when average salaries are less than €50,000.
The figures were published yesterday by the Banking and Payments Federation Ireland in its review of the domestic mortgage market. A report by the lobby group stated that the “median basic household income” of first-time buyers of new homes in the second half of last year was €91,000.
It was lower at €74,000 a year for first-time buyers of existing properties in the same period, but rose sharply for new homes and rose again to €109,000 for mover purchasers, while the typical, or median, income of first-time buyers of new homes in Dublin was €103,000.
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The household incomes highlighted by the BPFI are in stark contrast to average full-time salaries, which are just under €50,000. BPFI chief Brian Hayes suggested that the help-to-buy grant would help to bridge the affordability gap for first-time home buyers. He said: “First time buyers can only get the help-to-buy grant if they buy a new property. They can’t get it if they’re buying second hand. In many cases, that €20,000 to €30,000 makes a huge difference to bridge the gap.”
He added: “Since Covid, we have seen a dramatic rise in house price inflation. “Average prices now for first-time buyers across the country are €320,000 and around €250,000 is being borrowed against that. There has been a huge amount of savings in the economy. The CSO said, pre-Covid, savings [for mortgages] was 10% and is now about 20%.”
The BPFI’s latest Mortgage Market Profile Report also found that monthly mortgage repayments have increased considerably since 2020. Repayments have risen to more than €1,250 a month for 34% of first-time buyers in Meath, while the rate affects 47% of buyers in Kildare and 59% in Dublin.
Nationally, median monthly mortgage repayments stood at €1,089 for first-time buyers in the last six months of 2022, an increase of €100 from the same period in 2020. Hayes said: “Mortgages are cheaper now than some rents.” Despite these issues, the uptake of new mortgages was the strongest in the second half of last year since 2008 before the recession.
The number of loans taken out rose by 24% to nearly 31,000. There were 30,739 new mortgages and 14,018 of those were by first-time buyers, with 35.3% of these in 2022 being in Dublin. Mr Hayes said: “There has been a sharp rise in residential property prices from the middle of 2021, resulting in the continued increase in mortgage drawdown values we’ve seen in recent months.
“Property prices continue to increase year on year, albeit at a slower rate, and it remains a difficult environment for many buyers. However, the latest Mortgage Market Profile Report indicates that borrowers are being prudent and bringing more equity to purchases, likely in order to minimise borrowing costs.”
Former MEP Mr Hayes added: “This also likely reflects the trends we’ve seen in household saving, with the current rate of around 20% compared to about 10% pre-pandemic.”
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