Cash buyers account for half of house purchases

CASH deals account for half of house purchases and will likely play continued ‘big role’ in our property market, according to consultants Savills.

And although price growth has eased, the total number of housing transactions continues to increase rapidly.

Dr John McCartney, director of research at Savills, this is due to the continued presence of investors in the market. He said: ‘Following the withdrawal of tax incentives last December many people expected investors to exit the residential market.

‘However, we predicted that cash investors would remain active and this has proved to be the case.

‘Their continued appetite for property reflects rent increases which have supported buy-to-let returns, and low deposit rates which are driving money into better yielding assets.’

Looking ahead Dr McCartney said that cash will remain a big part of the residential story. He said: ‘Central Bank figures show that households have €93billion on deposit in the Irish banks. Given the differential between deposit rates and residential yields some of this money is surely going to find its way into buy-to-let investments.”

Last month one estate agent claimed that tough mortgage lending rules have led to families being squeezed out of the Dublin property market to the commuter belt counties.

Separate reports last month showed the Central Bank’s 20 per cent deposit requirement for buyers is having the biggest impact in affluent areas such as Dublin city and south Dublin.

The Real Estate Alliance said the deposit requirements were ‘squeezing out’ middle-income families to commuter counties such as Kildare, Wicklow and Meath as ‘they cannot afford to buy in Dublin’. REA’s latest house price index found that the price of an average three-bed semi in Dublin city fell by more than €19,000 – or 5 per cent – as the deposit rules took effect.