The latest property price report from Davy Research earlier this week confirmed that prices have risen a further 2% from August to September, making the average year on year increase almost 13% since September 2016. This is the fastest pace of inflation since May 2015 and further growth of 8% is expected throughout 2018, of course, that might well prove to be a conservative forecast.
The main driver of this appears to be greater availability of mortgages this year, although I’m sure it does not feel like to this to first-time buyers and those families in negative equity who are trying to trade up. What is interesting though is the massive jump in loan size during this period, from €189,000 to €206,000. This equates to a necessary 2.6% increase in the income of prospective buyers. Under Central Bank restraints, mortgage lenders can lend to a maximum of 3.5 times a buyers income. There is about 20% flexibility for banks here; that is not to say all mortgage applicants will benefit from 20% flexibility, but rather, the bank can extend the borrowing cap in 20% of cases. Right now, the banks have extended the caps for 18% of applicants. Simply put, the flexibility or bank discretion is almost gone and soon, there will be no bending of the rules; by law, even the best applicants, purchasing houses in the best locations, will be restricted to a multiple of 3.5 times their income. Home buyers in Wicklow and Wexford will be less affected by this as the average income-multiple for Leinster – outside of Dublin – is only 2.9.
It does raise the question for would-be buyers thinking about buying in 2018, should they start making their mortgage applications now, before all bank discretion is gone?
If the answer to that question is ‘yes’, then what does it mean for current sellers and homeowners thinking about selling in the New Year?
My advice for current sellers is to prepare their properties and property title, ramp up marketing and get realistic about price. Once you have your house in order (literally and figuratively!), it might be a good idea to reach out to house-hunters who viewed your property already but are delaying making a decision. This week’s property price and mortgage news might just re-focus their search.
For homeowners who are considering selling but not sure if November is a good time, I recommend contacting me directly or any of the team here in Kinsella Estates to get a free valuation done. During this valuation, I can give a few tips on small things you can do when preparing your home for sale that will make a big difference to prospective buyers – while enhancing the value and sale price of your home. More importantly, I can talk to you fully about the real marketplace. What this means is that we look beyond the property price reports and mortgage statistics above to let you know the competition that your property is likely to face on the market right now and what buyer or property investor demand exists locally. This is always the true determining factor of how long a property takes to sell and what price it achieves.
If you are considering selling in the South Wicklow and North Wexford areas, call into one of our offices (located in Carnew and Gorey) and chat to any of our expert team or you can contact us online at kinsellaestates.ie. We are happy to facilitate overseas buyers and sellers via Skype or similar, outside of regular office hours.
Alternatively, email me directly on firstname.lastname@example.org or telephone : +353 53 94 21718