What has the final few months of the year got in store for the property market?

What has the final few months of the year got in store for the property market?

It is still many peoples' dream to buy their own home

A soon to be published survey by MyHome.ie revealed that 62.7% of first time buyers hoped to purchase a home in the next 12 months, with a further 29.1% undecided.

Those figures, along with Bank of Ireland’s findings that 84% of 25-35 year olds want to buy their own home, means there is still a very real demand out there for Irish property.

Of course, you could come up with many reasons why that group of people waiting to buy should wait a little longer. There will be those waiting to see what the new property tax entails, others will say the market is still too inflated, while others simply won’t get access to finance.

As many as 42.8% of the first time buyers surveyed by MyHome though said they hoped to buy within the next three months.

The reasons for that are quite clear, with the mortgage interest relief extension coming to an end on December 31st.

By buying before the end of the year, first time buyers will qualify for generous tax relief up to the end of 2017.

First time buyers taking out a loan before the end of 2012 will get mortgage interest relief that could amount to savings at a rate of 25% of €10,000 a year for singles and €20,000 for married couples or those in civil partnership.

Similarly, there is also incentives for non-first time buyers to buy by the end of the year as they could save up to 15% of €3,000 for singles and €6,000 for married couples or those in civil partnerships.

Despite hopes of the scheme being extended, Minister for Finance Michael Noonan has given no indication that it will, meaning that if anyone wants to take advantage of these possible long term savings then now is the time to do so.

For many first time buyers, getting access to a loan is not easy though, as The Irish Times article with Emmet Furlong showed yesterday.

That is why Bank of Ireland’s announcement yesterday that it is launching a €2 billion mortgage fund to support people in purchasing a home is to be welcomed.

The bank will be pushing the new fund as part of Homebuyers’ Week, which kicked off this morning, and the hope is that other banks follow suit.

Pessimists will warn people against buying but the reality is that, despite all our problems with property in recent years, it remains a dream for many. And, who would begrudge anyone the chance to fulfill their dream?

Perhaps one of the biggest issues affecting the market, particularly in urban areas, is in relation to availability of stock though.

MyHome’s recent Property Barometer reported that stock in Dublin had fallen by just under 20% between Quarter 2 and Quarter 3 and unsurprisingly the availability of suitable stock (usually three and four bed homes) was the biggest influencing factor at 22% in keeping first time buyers away from the market – ahead of the likes of the property tax, deposit rates, a guarantee that the market had bottomed out and a possible extension of the mortgage interest relief scheme.

So as we head into the final few months of 2012, with Christmas already being discussed, we’d like to get your opinion on what the end of the year might have in store for the property market. Will there be a rush to avail of the mortgage interest relief before its extension ends and will the new Bank of Ireland fund have any impact on the market?

Have your say below….

There are 15 comments for this article
  1. James at 12:07 pm

    I am not too sure if many people read the comments on this ‘’my home blog’’,
    certainly there are precious few comments or contributions relatively speaking.
    The extensive coverage in one of the major Sunday papers (Sun 14th) was equally
    and mostly conjecture with some factual snippets thrown in most notable being Sophie White’s article taking a cynical and factual swipe at the lies and bull which emanates from the mouths of estate agents.

    People are mostly intelligent and educated enough to make an informed decision.
    I gave an example earlier (Fri. 12th, comment 5) as to how I would have been €27K euro, (Twenty Seven Thousand) out of pocket had I purchased just over 4 months ago and the same house in a desirable area is still on the market unsold.
    That’s an awful lot of money which represents house contents, extension, conservatory,
    under floor heating, solar energy, retrofit insulation, and a good deal left over for a cruise around the Med.

    More importantly, if that €27k was part of a mortgage drawdown it would be costing
    €48,600 over 20 years at current interest rates.

    Food for thought don’t you think ?

  2. Marian Wendel at 10:14 am

    You should never buy in a declining market!!! 2014 will be the year to buy…..and you will have 10yrs. before they start to creep up again like we had in the 80’s early 90’s.

  3. Ian at 1:24 pm

    I do not even know how I ended up here, but I thought this post was good.

  4. Niall Lennoine at 12:47 pm

    Living in that corrupt, feckless little country for 5 miserable years bankrupted me. Glad to be back on the mainland.

  5. patlyndo at 9:13 am

    @Paddy, great post.

    It’s stomach churning to read such ill thought out, badly researched rubbish. The most sickening part of that “report”:

    “And, who would begrudge anyone the chance to fulfill their dream?”

    Yes indeed – ask the thousands who listened to this in 2004/05/06/07/08/09 and 2010 how that “dream” is working out?

    We have learned nothing and that is the saddest thing of all.

    There is a saying here:

    “Any man can make mistakes, but only an idiot persists in his error.”
    Marcus Tullius Cicero

    it really applies in this case.

  6. Aidan at 8:44 am

    The average Irish household disposable income in 2010 was 43,333 That was two years ago its probably less now.
    Unfortunately everything going to plan whatever government is in power has to balance the budget and start paying down debt within the next five years, with little economic growth in those years the reality of that for households is that the 43k will have to decrease to 33k for your average household.
    So that is €10,000 Gone out of the Average household.
    You have the numbers judge wisely.
    Good luck

  7. Nesker at 5:07 am

    whistlingjacksmith said,
    “Here we go again. Another attempt to ‘kick start’ the market.”

    No truer words have ever been spoken. I have been watching the market for 2 years and it is not the time to buy.

    Oh, another thing that qustionaire is extremely warped Example – As many as 42.8% of the first time buyers surveyed by MyHome said they hoped to buy within the next three months.
    I hope to win the lottery in the next three months. I also hope to learn Chinese fluently in the next three months. People hope for a lot of crazy things.

    And another thing 42.8% of how many? I’m guessing twelve.

  8. Tony M. at 11:17 pm

    Another 10% drop in purchase price of a 100 – 200k home will out weigh any gain on interest relief. Simply, if you feel that prices are still decreasing then this interest relief is not a issue any-more.

    I disagree that cash buyers should hold off purchasing. Under the right circumstances for example: if your a firs time buyer and looking for a home and have significant savings and you can get the right deal say 70-80% below peak price then its time to buy. If the deal is 60% below peak hold off, consider the renovation costs; there are other better options going to come along.

    If your relying on a mortgage don’t buy anything less than 75 -80% below peak price and carefully consider the location alongside your future planning re employment, family, children and required facilities…

    Interest rates will only go up – there are no trackers and no initiatives mentioned by banks or the government to fix interest rates over the longer term.

    One final note: supply in some areas is limited. This is, to my mind, not because there are not sufficient vacant properties to meet demand, it’s because units are being kept off the market for the moment at least… This is a problem for purchasers, and for jobs and growth in the economy more generally. I may write something detailed on this last issue soon; this space is not sufficient to do so, as the issue will require some referencing and detail.

    Corrections welcome

  9. James at 10:49 pm

    High home prices benefit nobody. In Ireland far too high a percentage of income is spent on housing.

    The best way to get prices down would be to throw delinquent borrowers out and force the banks to immediately sell the properties on the market.
    The borrowers would then be able to rent the same homes at a fraction of the price.

    “Keeping people in their homes” is harmful as it artificially supports home prices. We need home prices to be 50% lower. People would then be able to pay rent with lower wage jobs.

  10. James at 9:05 pm

    ‘’The Truth About Irish House prices’’

    Be wary of signs of recovery in the Irish Property market.
    Like Britain’s housing market. Ireland’s is not uniform. In Britain
    prices are rising in London, but falling almost everywhere else.
    Ireland is the mirror image – prices are rising in rural areas, but
    still falling in Dublin. In August, prices in the capital fell by another 0.5%.

    And that’s worth paying attention to. Because as David McNamara of
    Davy’s argues, the rural property market is a poor guide to what is really
    happening. This is because it is ‘’illiquid’’ and ‘’dysfunctional’’.

    What’s happening is that, rather than cutting prices to where they would
    find buyers, heavily indebted homeowners are choosing to stay in their
    property as long as lenders are willing to let them. This shortage of housing
    means that those who do want to buy in rural areas have to pay a premium
    to do so.

    This mismatch between supply and demand is shown by the fact that mortgage
    lending and transactions outside Dublin are at historic lows.

    It’s not unlike the situation in Britain, where homeowners who can’t afford to
    move or remortgage are only able to cling on to their homes for as long as
    interest rates remain zero.

    McNamara also warns that auction and portfolio sales suggest that the scale
    of the fall in Irish house prices may be even greater than official data recognizes.
    Ulster Bank recently sold a package of apartments, along with some commercial
    property, at a price that was 70% below the 2007 peak, rather than the 50% that
    the house prices indices suggest.

    Buyer Beware.

  11. James at 7:39 pm


    Excellently put over, makes total sense, thank you

    Paddy: …

    Agree with you 100 %

    I am one of those cash buyers and as much as I would like my own
    living room I will continue to rent for the time being. I will be looking to
    buy perhaps in 2013 or even 2014.
    We almost bought last April and I am so glad we didn’t as the same 4 bed
    detached property (still unsold) is now being advertised at €27k below the
    April asking price. I am renting a new and furnished 4 bed semi for €750 euro
    a month, (9K per annum) and the interest on my deposit savings pays most of that.
    Those 1st time buyers who jump or are lucky enough to get mortgage finance
    so as to avail of the alluded tax benefits will be kicking themselves come 2014
    when property price have declined by a further 12%.
    They will be enjoying their mortgage interest relief but their houses will be worth
    less than they paid for them.

  12. Leesmee at 6:32 pm

    We are first time buyers and have been looking for a whole now. We were sale agreed on a property but the vendors pulled out and decided to rent, something which seems to be happening a lot.

    We spend every day trolling websites and arranging viewings on evenings and weekends only to be told on arrival an offer has already been received. However on a few occasions these offers fall threw a few weeks later and are we interested.

    There is a massive shortage of good, quality homes that are decorated well. A lot of the houses out there need a good bit of work but unless you have the money saved to do up the house, there’s no point.

    I’m fed up about overseas investors buying houses for cash andalusia it difficult for us to get on te propery ladder. I’m in my mid 30s and want to have a family but feel we will never be able to afford or find anything.

    I feel the price now are inflated due to thr TRS finishing and feel there will be another slump next year when it’s finished and the property tax has been introduced.

  13. Laura at 3:31 pm

    There is always some reason for people to hold off on buying. Meanwhile they are missing great houses. Likewise sellers are thinking that buyers aren’t buying and not putting their house on the market…. it only takes one!

  14. whistlingjacksmith at 1:05 pm

    Here we go again. Another attempt to ‘kick start’ the market.
    Tax relief, shortage of properties in some areas, indications of rising prices… thay have all been attempted and failed.
    When an average 3 bed semi in Dublin can be bought for around four times the average industrial wage (roughly 100,000) the market will begin to move again.
    Meanwhile buyers should sit tight and wait.

  15. Paddy at 12:18 pm

    You are a first-time buyer for the purposes of mortgage interest relief if you are in the first seven tax years of receiving the relief.
    Mortgage interest relief for first-time buyers in 2012 is 25% for the first and second tax year in which you pay mortgage interest. You will get relief of 22.5% in tax years 3, 4 and 5. After that you will get relief of 20% but 2017 is the last year in which mortgage interest relief will be available.
    The amount of mortgage interest on which you can get relief is subject to upper limits or ceilings. The ceiling that applies to you depends on whether you are single; married; widowed; in a civil partnership; or a surviving civil partner.
    The following are the ceiling amounts for 1st time buyers for tax year 2012: Single €10,000 Widowed/Surviving civil partner/Married/in a civil partnership €20,000. Therefore up to 25% of up to €20,000 interest can be saved by a couple in the first two years, reducing till the tax credit expires after seven years.
    Therefore the maximum saving over seven years is €31,500 for a couple and €15,750 for a solo buyer. To save this amount a buyer would need to raise a mortgage of €500,000 assuming a 4% interest rate.
    With today’s typical 25% deposit requirement a house valued at €625,000 would have to be purchased to maximise the available tax credit, the typical buyer raising a €100,000 to €250,000 mortgage will receive only a portion of the available relief.
    A further drop in house prices is likely following the end of tax relief and the reduction to rent support in January 2013. Should this drop be greater than 4.75% it makes more sense for a buyer taking out a 75% mortgage not to buy in 2012. Cash buyers or those with large deposits are in every case probably better off leaving the market to those influenced by the tax relief and waiting till 2013 or 2014 to buy.

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