House loan approval fell 43.2% in third quarter of last year

LENDING FOR house buying fell by some 40 per cent in the third quarter of 2008, to €3.2 billion, according to figures released by the Department of the Environment yesterday.

Some 12,629 loans were approved by Irish financial institutions for house purchases – representing a decrease of 43.2 per cent in value compared to the same quarter of 2007. The Housing Bulletin statistics for the third quarter of 2008 also revealed the average price of a new house nationally was €301,680 in the third quarter of 2008, down by 5.5 per cent on the same period in 2007.

The average price of a secondhand house nationally was €335,762 in the third quarter of 2008, down 10.3 per cent.

The average price for a house approved for a loan in the Dublin area was €347,233 (new) and €412,152 (second-hand), both down by 15.8 per cent.

The figures also showed a probable peak in the supply of social and affordable housing.

Based on the first nine months of 2008, final figures are expected to show in excess of 13,000 new social and affordable homes provided in the full year – but with a significant drop expected for 2009. More than 4,000 affordable homes were completed in 2008 which, combined with more than 9,000 social houses, will give an expected full-year figure of more than 13,000 for social and affordable housing.

In 2007, the number of affordable homes was 3,539, while the number of social homes was 9,579. The 2007 figures were up on the total of social and affordable for 2006, which was 9,709

A spokesman for the department said the rising trend had been largely as a result of “part V” of the Planning and Development Act which required property developers to sell up to 20 per cent of their developments at reduced prices to local authorities in return for planning permission.

As new developments fall dramatically, so too does the number of part V homes, indicating 2009 will show a significant drop.

However, the spokesman said Government plans to introduce a lease-style arrangement for those on the social and affordable waiting lists, would “make up at least some of the difference”.

Minister for Housing Michael Finneran said efforts would be made to maintain the National Development Plan target of 100,000 homes in 2007-2013.