Help to Buy scheme appears to help slow new house price increases
Cost of homes overall continued to rise sharply in 2017, Sherry Fitzgerald says
House prices increased more in the first six months of 2017 than in the whole of 2016, according to Sherry FitzGerald. Photograph: Cyril Byrne
The cost of buying a newly-built house in Dublin continued to rise this year but at a much slower pace, suggesting the Government’s Help to Buy scheme is having an effect on inflation.
The average price of a newly built home in Dublin increased by one per cent during the first nine months of the 2017, the first full year of operation for the scheme. The growth rate for 2016 was near five per cent.
The Help to Buy Scheme offers a grant of up to €20,000 to first time buyers of new build homes. It was introduced in July 2016 to help first time buyers gather money for a deposit and to ease inflation in the market.
However the scheme appears to be having much less of an impact on a national scale. When the rest of the country is taken into account, new house prices rose by 10 per cent over the year, according to the latest statistics from estate agents Sherry Fitzgerald. The same figure for 2016 was 18 per cent.
The year saw a significant increase in the volume of new houses coming on the market. New dwelling sales increased by over 27 per cent during the first nine months compared to the same period in 2016.
Forty-one per cent of these new builds were in Dublin where the number of sales increased by over a third compared to 2016.
When existing builds are taken into account, house prices continued to rise sharply and at a faster rate than 2016. On a national basis the average cost of a house rose by 8.4 per cent during the year, compared to 5.2 per cent in 2016.
The regional centres of Galway, Cork and Limerick also experienced substantial price growth of 8.4 per cent, 7.3 per cent and 7.4 per cent respectively over the year.
The increases were even more severe in Dublin where the average house price has increased by 8.3 per cent, compared to 3.7 per cent this time last year.
House prices increased more in the first six months of 2017 than in the whole of 2016. The rate of increase slowed somewhat towards the end of the year- prices increased by 1.5 per cent during the last three months both nationally and in Dublin.
According to the most recent data available, there were over 37,500 residential property sales in the first nine months of 2017. This falls to 35,600 when multi-family and portfolio sales are excluded.
The number of transactions nationally increased by nine per cent during the same period compared to 2016. In Dublin where 11,400 sales took place, the rate of increase was 10 per cent for the first three quarters of the year.
The number of buy-to-let investors continued to contract in 2017, placing further pressure on the rental market.
A third of Sherry FitzGerald investors were selling their investment properties in 2017, while new investors entering the market represented only 20 per cent of purchasers.
The number of cash buyers also decreased last year. Data from the Property Price Register suggests that 42 per cent of residential property buyers did not have a mortgage during the first nine months of the year. This compares to 47 per cent for the same period in 2016.