Demand for home purchases remains robust but increasing share of apartments may affect speed of housing delivery in 2024 – BPFI Housing Market Monitor
New survey indicates one in ten buyers have used gifts or inheritance to buy or build a home
Tuesday 24th September 2024 – The latest Housing Market Monitor Q2 2024, published today by Banking & Payments Federation Ireland (BPFI), shows that demand for home purchases remains robust but the increasing share of apartments in new housing developments may affect the speed of housing delivery in 2024,given longer completion times for apartment units compared to housing schemes.
Outlining the key findings from the monitor, Brian Hayes, Chief Executive of BPFI stated: “While we’ve seen a slight slowdown in mortgage activity in the first half of 2024, demand for home purchases remains robust with 49,384 mortgage approvals in the twelve months ending July 2024. Almost 31,000 of these approvals were for first-time buyer (FTB) mortgages, the highest annualised levels since the data series began in 2011. However, homebuilding seems to have stalled in the first half of 2024 with a decrease of 9% in the completion of housing units compared to the same period in 2023. The majority of this decline is accounted for by the decrease in apartment completions. While the proportion of apartments being built has risen in recent years, increasing from 16% of all completions in 2019 to over 35% in 2023, they take longer to complete compared to housing schemes so we may see delays in the expected increase in total housing units completed in 2024.”
One in ten have used gifts or inheritance to buy or build a home
Mr Hayes continued: “Today’s report also shows that the average loan to value (LTV) for an FTB mortgage in 2023 was 86%, according to the most recent Central Bank of Ireland (CBI) data, and 68% for a second and subsequent buyer mortgage. These are similar to the levels observed in 2019 prior to the pandemic. However, during this period, as average house prices have increased, the average deposit amount provided by home buyers has also increased, which raises the question of how people are meeting these rising deposits.”
“Some of the increase is likely to have been met through buyers’ own savings, with average weekly earnings increased by around 17% in the five years from 2019 – 2023, according to CSO data. Another likely source is the Help to Buy (HTB) scheme, with applications for the scheme to the Revenue Commissioners increasing by 41% year on year in the first eight months of 2024 to 25,359. In addition, our survey published today shows that 38% of Irish adults have received a substantial gift or inheritance and approximately one third (34%) of those used it to help them buy or build their own home. This means that nearly 13% of Irish adults have used a gift or inheritance to help them buy or build their own home.”
Output expected to increase in the second half of the year
Mr Hayes concluded: “Looking forward, housing output is expected to increase in the second half of the year with the annual number of completions due to be at or above the levels observed in 2023. In addition, commencement activity points to a further increase in output in the short term, although with the share of apartments increasing, it is likely that we may see delays in the expected increase in total housing units. While mortgage activity remains strong, especially in the key FTB segment, the delays in housing delivery could have an impact on the growth rate in the mortgage market.”
ENDS/
The BPFI Housing Market Monitor Q2 2024 is available to download here.
The BPFI Survey about Gifts & Inheritances was conducted in July 2024 by Amárach Research amongst a nationally representative sample of 1,000 people.
Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland. Together with its affiliates, the Federation of International Banks in Ireland, and the Fintech & Payments Association of Ireland, BPFI has over 110 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace.
Contact: Fiona Murphy, Head of Communications, 087 9740046, fiona.murphy@bpfi.ie or Jillian Heffernan, Director of Communications, 087 9016880, jillian.heffernan@bpfi.ie.
