Second-hand rural homes suffer biggest price drops

Mortgage providers to restrict loans for homes in rural areas
By Charlie Weston Personal Finance Editor
Tuesday January 18 2011

A NUMBER of mortgage providers are to curtail lending for homes in
rural areas, the Irish Independent has learned.

The revelation appears to confirm that a two-speed housing market has developed.

Property prices in towns and cities are expected to recover well ahead
of rural areas.

KBC Bank and ICS Building Society have both said that they will
require much larger deposits from those buying outside urban areas.

This follows last year’s move by EBS Building Society to stop lending
for the purchase of apartments outside urban areas and commuter-belt
locations.

KBC Bank will now require a deposit of 20pc of the value of the
property to be put up by those buying in rural areas, but a deposit of
just 10pc for purchases in urban areas — defined as towns and cities
with a population of more than 15,000.

The bank will also consider funding first-time buyers and movers for
up to 80pc of the purchase prices in larger population centres in
counties Meath, Kildare and Wicklow.

ICS has told mortgage brokers it will require anyone buying a one-bed
apartment to have a deposit of at least 35pc of the value of the
property if they are buying outside Dublin, Limerick, Galway and Cork
cities.

Last summer, EBS said it would stop lending for apartment purchases
outside major urban locations.

If the apartment is in a major urban location like Dublin, Limerick,
Cork or Galway cities, EBS will lend up to 85pc of its value.

If it is in a commuter-belt town — like Navan, Co Meath or Newbridge,
Co Kildare — EBS will lend up to 80pc.

But if the apartment is not in one of these categories, the
application will not even be considered.

Many of the country’s 2,800 ghost estates are in rural areas.

The ghost-estate problem is at its worst in western counties were the
large number of unfinished estates is coupled with low populations, a
recent report for the Department of Environment found.

Discriminate

Mortgage broker Karl Deeter of Irish Mortgage Brokers said lenders
were now discriminating against those seeking loans to buy property in
rural areas.

“If you are not buying in Dublin, Cork, Limerick or Galway cities they
do not want to know. This is all part of a growing trend to
discriminate against properties outside of the cities,” Mr Deeter
said.

The latest Daft.ie report showed asking prices falling by 50pc from
their peak in Dublin.

By contrast, prices have fallen by just 30pc in rural parts of Mayo
and Limerick.

Daft economist Ronan Lyons said there was now a two-speed property
market in operation throughout the country.

“It is the cities, and particularly Dublin, that are most likely to
stabilise first, and it remains to be seen if this happens in 2011,”
he said.

“Those places away from the main cities and from Dublin’s orbit have
taken the smallest steps so far towards sustainable prices.”

New figures from ratings agency Moody’s showed that almost 13,000
struggling homeowners face losing their homes after failing to pay
mortgages for at least a year.

The situation is expected to get worse as a toxic combination of
government spending cuts and tax increases slash household disposable
incomes, reducing borrowers’ ability to maintain mortgage payments.

– Charlie Weston Personal Finance Editor

Second-hand rural homes suffer biggest price drops
By Donal Buckley
Tuesday January 25 2011

SECOND-hand rural homes and apartments in Leinster suffered the
sharpest price falls in 2010, estate agents said yesterday.

Prices for second-hand homes in towns and cities fell by 17.5pc, and
by 18.5pc in rural areas.

These are among the findings in the latest survey of estate agents
published jointly by the Irish Auctioneers and Valuers Institute and
the Society of Chartered Surveyors (IAVI/SCS).

Across all regions the survey shows that last year’s falls were
sharper than those reported by Permanent TSB (PTSB) last week. PTSB’s
index estimated the average fall in all house prices in 2010 was only
11pc.

However, both surveys agree that the pace of decline in prices slowed
last year — although IAVI says not in all house types.

Rather than average prices, as shown in other surveys, the IAVI/SCS
survey is confined to member estimates of percentage price changes.

The IAVI/SCS survey also takes a closer look than the PTSB at
different house types in each region and this aspect of its survey
shows the average Leinster one-bedroom apartment fell by as much as
25.4pc in 2010 on top of a 24.4pc decline in 2009.

The smallest drop in 2010 was for new two-bedroom townhouses in Dublin
which fell by only 12.2pc after a fall of 17.7pc in 2009.

– Donal Buckley

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