Ireland’s Housing Market: Shortage Creates Spike in Mortgage Values
Figures from mortgage lenders highlight a severe scarcity of properties on the market in Ireland. This shortage is forcing new buyers to secure homes with much higher borrowing amounts than in previous years.
New Borrowers Pay Hefty Premiums
New buyers are having to borrow around €65,000 more than they did in 2020 to secure a property. The annual volume of mortgage drawdowns was at its lowest point since 2020, according to data from the Banking and Payments Federation Ireland (BPFI). However, the average mortgage value reached an all-time high last year.
Record-Breaking Mortgage Values
The average first-time buyer mortgage for new properties climbed by 1.6% to €322,000. For both new and older properties, first-time buyers drew down an average of €309,000, which is almost €65,000 more than the previous year. For second-hand properties, the average first-time buyer mortgage increased by 7.4% to €284,000.
The rise in mortgage values reflects the fierce competition for a limited supply of homes. Last year, approximately 8,300 more potential buyers were approved for a mortgage than actually drew funds.
First-Time Buyers Dominate the Market
First-time buyers continue to dominate the market. Over 26,000 new buyer drawdowns were recorded last year, with the value of first-time buyer mortgages reaching €7.8 billion, the highest annual level since 2007. Over the past five years, nearly 119,000 first-time buyer mortgages have been approved.
“It remains to be seen how quickly new housing will be delivered in the months ahead.”
CEO’s Outlook on Future Trends
Brian Hayes, the BPFI chief executive, commented on the strong demand for housing and mortgages. He noted that average mortgage values hit record highs last year, with first-time buyer mortgages on new properties or self-builds reaching their highest levels since 2008 and 2007, respectively.
Monthly Mortgage Approvals Show Declines
The number of mortgages approved in December fell by 18% compared to November, totaling 3,592. Despite this decline, the value of approvals rose by 38% year-over-year to €1.1 billion. Re-mortgage and switching activities saw significant drops in both volume and value, falling by 60% and 76%, respectively, over the same period.
Year-End Review and Projections
Last year, more than 51,000 mortgages were approved, valued at over €15.3 billion. Looking ahead, the BPFI expects strong housing and mortgage demand to continue in 2025. The sturdy growth in mortgage approvals indicates a potential increase in future mortgage output.
However, Hayes emphasized the need for increased new and second-hand housing supply to meet demand. While housing commencement activity surpassed 60,000 units in 2024, uncertainties remain about the pace of project delivery.
“Housing commencement activity exceeded 60,000 units in 2024, but it remains to be seen how quickly new housing will be delivered in the months ahead and how much will be made available for private purchase,” Hayes concluded.
Conclusion
The acute shortage of properties in Ireland is driving up mortgage values and creating a competitive market for home buyers. As demand for housing remains strong, the coming years will be crucial in balancing supply and demand. Increased housing output and supply will play a critical role in addressing these challenges.
We invite you to comment on your thoughts about the housing market in Ireland. Share your experiences and predictions for future trends. If you found this article informative, consider subscribing to our newsletter for more updates and insights. Follow us on social media to stay connected and informed about the latest news in the housing sector.