Rising Home Prices Expected as Mortgage Approvals Surge

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As of May 2021 Ireland has seen a significant increase in mortgage approvals as the Irish housing market continues to feel the pressure of the post-Covid sprawl. Home buyers and sellers expect to see prices surge upwards as mortgage approvals for families and individuals looking to buy a new home continue to increase.

In May 2021, nearly 4,700 people were approved for mortgage loans for a new home, which is around a 150pc increase from May of 2020. Along with the increasing number of mortgage approvals the Irish housing market has also seen a steady rise in home prices of around €3,000 per month. Modern economists are comparing this surge in home prices to the Celtic Tiger period in Ireland on the late 1990s and early 2000s, as these surges in property prices reflect the rates at which property values rose during the time period.

The number of mortgage approvals are still moving upwards, as the number of approvals is a 7.4pc increase from the mortgage loans approved back in April 2021. This surge has been largely driven by first-time home buyers, as over 50pc of the 4,683 mortgage approvals in May were made for them, with mover purchases making up about a quarter. In the last 12 months up to and including the month of May around 49,000 approvals were made, all together with a value of about €12 billion.

Currently, the average national house price in Ireland sits at around €284,000. This is quite a significant increase over the last year of around €34,000, at a rate of about €3,000 per month. As of June 1, 2021 there are only around12,300 properties available for sale around the country, which is about a third lower than the supply was on the same date a year before.

As mortgage approvals continue to increase, Ireland will likely see a lot of these approved parties being unable to actually draw down their mortgage loan. Part of the reason why prices have increased so much is that with this large amount of demand from home buyers there is actually a relatively low supply of available homes all over the country. Home buyers have had to offer over the value of a lot of homes to ensure that their bid for their desire home wins and they earn the right of ownership to the home. If certain home buyers are unable to increase their offered price for a home, they will be unable to find a property, and will likely lose their approval for a loan forcing them to try again in the future.