Cash house purchases increase as first-time buyers get help from "mum and dad"

New mortgage regulations have been accused of increasing inequality in Ireland's housing market

Cash house purchases increase as first-time buyers get help from "mum and dad"

Bachmont, Flickr

Cash buyers currently account for 47% of all house and apartment purchasers according to a report by estate agents, Savills. 15% of people buying houses with cash are first-time buyers.

Its director of research John McCartney says that the proportion of first-time buyers paying in cash implies that, under new mortgage regulations, young purchasers are "relying on the bank of mum and dad as they wouldn’t have the money for a deposit."

Rules introduced in January 2015 require first-time buyers to save a 15% deposits on houses worth up to €220,000, and 20% on the balance beyond that.

This is expected to result in people renting later into their working lives.

“Continued house price growth meant that the deposit they needed was rising naturally. Also, in the post global financial crisis world, homebuyers could no longer expect the real value of mortgage debt to be quickly eroded by inflation.

“Adding the new macro-prudential rules to these factors has led to increased inequality as first-time buyers with access to family wealth have a distinct advantage,” Mr McCartney added.

Rising rents are making it harder for buyers to save a deposit. The latest report from Daft.ie has found the number of available rental properties is less than a quarter of what it was five years ago.

At the end of last year the average rent was €979, with values up 9% nationally.

Rent increases were higher in regional cities, with Cork seeing them jump by more than 15%.

Galway was up over 13%, and Limerick rose 12.4% - meanwhile rents in the capital increased by 8.2%.