03 Dec 2021

House prices in Kilkenny City now exceed local authority mortgage cap

Since February, local authorities have been offering Rebuilding Ireland home loans

House prices in Kilkenny City now exceed the Rebuilding Ireland local authority mortgage cap of €250,000 for the area.

Prices in the City increased by 1.7% to an average price of €252,333 in the last quarter, according to the national survey carried out by Real Estate Alliance.

Since February, local authorities have been offering Rebuilding Ireland home loans, a Government backed initiative which aims to offer low-cost mortgages to purchasers who have difficulty in securing finance from the main lenders.

In line with Central Bank rules, borrowers are able to borrow up to 90% of the purchase price, up to a maximum purchase price of €250,000 in Kilkenny. However, the average price of a house now in the City has exceeded this price.

Meanwhile, according to the latest report, the average house price is now €221,000 in Kilkenny county, 67% above its lowest point.

Last month Kilkenny County Council was granted approval to draw down an extra €5m from the Housing Finance Agency for loan purposes despite applicant numbers being “slightly down”.

Cllr Patrick McKee said: “The extra €5 million is welcome, but the only way an affordable mortgage scheme will work is where it is implemented in tandem with the construction of affordable housing.

“Otherwise you are left with applicants having the option of taking out an affordable housing loan, but simply cannot find an affordable house to purchase.

“That is the problem in Kilkenny, affordable housing is scarce, if non-existent and this is borne out in the data provided by the REA.”

Despite the average City price exceeding the home loan cap, the price of the average three-bed semi in Kilkenny rose by 2.3% to €211,167 between March and June, according to the REA survey.

In Kilkenny overall prices rose by 12.6% in the last 12 months. Cllr McKee added: “On average there is a 50% refusal rate for applicants and in my view, it is important that the applicants who are refused know exactly why they were refused.

“Currently there is no appeals process, in fact there is no information whatsoever given to those who are refused. That is not fair.

The Council is the lender of last resort for these applicants and they should be fully informed of why they were refused. The legislation needs to be amended to ensure full transparency in the process.

“Over-all, the revised Local Authority Mortgage Scheme must be welcomed, but the problem here is supply of housing, not a lack of finance for purchasers.

“Until Government takes direct action and ramps up the delivery of housing the problem will persist. We need a radical solution here, that just hasn’t happened to date.”

The REA Average House Price Survey concentrates on the actual sale price of Ireland’s typical stock home, the three-bed semi, giving an up-to-date picture of the second hand property market in towns and cities countrywide to the close of last week.

“Supply is still poor, the market was reasonable in March and April, but there was a slowdown in May and early June,” said Robbie Grace of REA Grace in Callan.

With regard to the amount of home loans, Head of Finance at the Council, Martin Prendiville, has said that the “numbers are slightly down” but the local authority are still issuing a significant number of loans on a monthly basis.

Applicants must have proof that they have been turned down for a mortgage, or were offered “insufficient” finance, by two lenders.

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