According to a recent study by the Banking and Payments Federation of Ireland (BPFI), one out of eight property purchasers utilised a gift or inherited money to aid in the acquisition of their home. The BPFI’s latest housing report showed that even though the average loan-to-value ratios for first-timers and existing buyers remained relatively unchanged from 2019 to 2023, there was a significant surge in average property prices. This resulted in the necessity for larger initial deposits, leading to queries of how individuals can afford the growing deposits.
Part of the increase could be credited to customers utilizing their own savings due to increased incomes, along with another part possibly stemming from the government’s Help-to-Buy tax refund, which has already seen a 41% uptick in applications this year. Nonetheless, a BPFI survey revealed that around 38% of Irish adults have been recipients of an ample gift or inheritance, with roughly a third utilising it to purchase or construct a home.
“This demonstrates that close to 13% of Irish adults have used a gift or inheritance to assist in purchasing or building their home,” remarked Brian Hayes, BPFI’s CEO. Most individuals inherit money in their 50s as per data from Revenue and other sources, implying that a significant number of property buyers are likely to have received financial assistance from their parents.
The BPFI report also cautioned that housing production may be hindered this year due to an increase in apartment construction in new developments. Longer completion times for these apartments could result in the number of new homes finished this year being on par with or slightly exceeding last year’s total of 33,000. “Housing output is projected to rise in the second half of the year, and annual completions are expected to match or surpass the levels seen in 2023,” said Mr Hayes.
The initiation of an increased number of construction projects indicates a potential rise in housing output in the near future, Mr Hayes noted. However, with a higher proportion of flats being built, it’s probable that there could be delays in the projected rise in the overall number of homes. Although home loan activity continues to be vigorous, particularly among first-time home buyers, these potential delays in housing provision might affect the growth pace of the mortgage market, Hayes added.
The recent review by BPFI highlighted a slight deceleration in mortgage activity in the initial six months of 2024. However, with a total of 49,384 home loan approvals in the year ending July 2024, the demand for property acquisition is still solid. Nearly 31,000 of these approved loans were for first-time home buyers, marking the highest annualised rates since records began in 2011.