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House prices to rise as pandemic enables buyers to save money

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First-time buyers have been able to save up for a deposit

First-time buyers have been able to save up for a deposit

First-time buyers have been able to save up for a deposit

Property prices are set to be pushed up further as would-be buyers have been able to put aside more money during the pandemic.

While some households have suffered greatly from the financial impact of Covid, the shutdown in spending means that others have been able to save more than ever, a new survey suggests.

It comes on the tails of record mortgage approvals for October, driven by first-time buyers seeking homes.

Taoiseach Micheál Martin admitted that the potential impact on the housing market would have to be assessed.

"Covid has created a situation which will ultimately have an impact on housing," Mr Martin told the Dáil.

"There has been an enormous increase in household savings throughout the country because of the impact of the crisis on spending in the economy during the past nine months.

"That is being evaluated in terms of its potential impacts on the market over the coming year."

House hunters already face the challenge of a lack of supply which has been exacerbated by construction work slowing down or stopping altogether during lockdown.

Property website MyHome.ie has suggested that 58pc of prospective homebuyers have been able to save more money for a deposit since the emergence of the virus in March.

Meanwhile, 41pc of respondents to the survey agreed that the home-buying market is more competitive now than it was before Covid-19 emerged.

Despite the pandemic's impact on the economy overall, a mere 22pc believe that property prices will fall by more than 5pc in the coming year.

Insulated

"These survey findings show us that prospective homebuyers are still largely insulated from the economic effect of Covid-19, but the virus has still had a significant effect on the sector ," said Angela Keegan, managing director of MyHome.ie.

"Once the economy gets back up and running we will hopefully see an increase in construction activity which would redress the balance between supply and demand."

Speaking yesterday in the Dáil, Mr Martin said that "the bottom line is that the output in 2020 will be approximately 18,000 houses, if we get there".

This is below the target of 25,000, which remains the aim for 2021.

"There is no huge private sector out there at the moment in terms of house construction," Mr Martin said.

Sinn Féin leader Mary Lou McDonald said the Help to Buy scheme is inflationary.

"It transfers taxpayers' money directly into the pockets of developers and increases property prices," she said.

Quoting figures from the Banking and Payments Federation, she said the data pointed to a very worrying spike in house prices.

"On average, first-time buyers are now borrowing €10,000 more than was the case last year," she said.

"It is worse for other borrowers, who are borrowing €15,000, on average, more than was the case last year.

"This reflects a very serious hike in house prices, which is a problem at any time but is outrageous in the middle of a pandemic when the incomes of so many people have collapsed."


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