Some 71% of first time buyers in Ireland have been impacted by new mortgage rules introduced by the Central Bank, most of them negatively, new research has found.
It also found that t takes six years and six months to save for a deposit and two in five aspiring home buyers have yet to start saving while 42% need help from family members to do so.
The research, carried out by market survey firm Behaviour and Attitudes for 11 different organisations, shows that 69% planning to take a mortgage have put buying on hold while 52% have excluded the area where they actually want to live on the basis of unaffordability.
Two in three would be first time buyers are trying to save for a deposit while paying high rents and the survey report says that a knock-on effect on higher rents seems inevitable.
It also mentions the social cost of the mortgage change which means people moving away from family networks and to areas with lower amenities such as poorer transport, childcare facilities, schools, roads, and further from work.
Already two out three are having to look more than six kilometres from where they would like, and three in 10 more than 15 kilometres, diminishing the ability to rely on family assistance for childcare and may result in one parent having to quit work to look after their children.
‘We all share the Central Bank’s objective of increasing the resilience of the banking and household sectors to shocks in the property market. However, there are serious unintended consequences arising from the rules, which are reverberating way beyond their intended purpose,’ said Michael Dowling, Chairman of the IBA Mortgage Committee.
‘They are contributing to an inequality of opportunity between those with family wealth and those without. And they are leading to urban sprawl as buyers move further from their desired locations,’ he added.
Dowling pointed out that the study suggests that deposits are a primary inhibiting factor for prospective buyers. And even though house prices are still 35% below peak levels, over a third believe they remain too high.
‘This research was undertaken in the context of the Central Bank review of the macro prudential rules but since the implications of the rules have much wider import it should also be of interest to the Government in framing the forthcoming budget,’ he said.
