Eight reasons from CIF to buy property in ’08

Eight reasons why 2008 will be the time for people to buy property were recently outlined by Ray Gilboy, Director of the Western and Midlands Region with the Construction Industry Federation.  His comments come at a time where there has been a 66 percent fall off in new home starts in the county and a 34 percent fall in completion. Mr. Gilboy was speaking at the Midlands Branch meeting of the Construction Industry Federation (CIF) which includes Co. Roscommon, on Tuesday 26th February in the Tullamore Court Hotel. In September 2007, in the run up to the Budget, Construction Industry Federation (CIF) stated that Government action and a range of other measures were needed to ensure a positive housing market in 2008. Uncertainty in the housing market in 2007 prompted many to adopt a wait-and-see attitude in the housing market. This invariably fed into house building activity with a 66 percent falloff in commencements of new homes throughout Roscommon and a 34 percent falloff in the number of houses completed in the last 12 months. Based on available statistics, nationally approximately 25,000 new homes will be built in the first six months of 2008, with output during the second half of the year dependent on market conditions. Before December’s Budget, the CIF argued that output for the year as a whole could be lower than 45,000. However, the prospects for buyers in the housing market in 2008 have improved significantly. The improved prospects rest on a number of factors that can be summarised under eight main headings. Stamp Duty Savings The Budgetary reform of stamp duty brings clarity, simplicity, savings and much needed certainty to the market. First time buyers no longer pay stamp duty when buying a house and both owner occupiers and investors now benefit from significantly reduced stamp duty on the both the new and second hand market. Mortgage Interest Relief First time buyers also benefit from a significant increase in mortgage interest relief in the Budget and young couples can now avail of over €333 per month in mortgage relief, which is paid at source. Very good value Perhaps the most significant factor in supporting a positive housing market this year is the very good value and choice that is now clearly available to buyers in Roscommon. It is clearly a buyer’s market and people who had despaired of ever getting on the housing ladder or trading up to suit changed family circumstances now have the chance to do so. Improved affordability The combination of the above has brought about significant improvements in affordability. According to the most recent EBS/DKM Affordability Index, affordability has improved by 10 percent on the same period last year and houses today are more affordable than at any point in the last decade. Rent-a-room-scheme The Budget also increases the threshold for the rent-a-room-scheme, meaning young people can now earn €10,000 per year tax free and without affecting their owner occupier status. Rising rental costs The underlying demand for accommodation in Ireland and a reduction in the number of rental properties coming to market have resulted in significantly increased rental costs. Rising rents invariably improve rental yields, which will trigger increased investor activity in the market. It is now also the case that in many areas, it is now cheaper to buy than to rent. Interest rates The decision by the European Central Bank not to raise interest rates last autumn brought relief to the market and the signals now are that interest rates may not rise for the first half of 2008. After a series of interest rate hikes, this is welcome news for existing home owners but significantly helps to restore buyer confidence. Continued population growth The main driver of strong demand for housing in Ireland remains demographic change. Ireland’s population is growing faster than anywhere else in Europe, particularly within the key house-buyer age group; despite 14 consecutive years of record housing output Ireland still has one of the lowest housing stocks per one thousand of the population and, conversely, one of the highest average household size. In addition, Ireland’s population is expected to rise by one million people by 2020, which, considering Ireland’s population of just over four million is a significant figure indeed. ‘Despite the doom and gloom that has permeated much of the ongoing discussion on the economy, Ireland remains the envy of Europe. In the past decade the Irish economy has more than doubled, with an additional 800,000 people at work and with growth rates far in excess of anything experienced elsewhere in the EU. ‘Construction Industry Federation remains positive about the housing outlook for 2008 in Roscommon, for all of the reasons outlined. 2007 was a challenging year; however the key issue of buyers’ confidence will ultimately determine whether we have a positive year for house building in 2008.’