Mortgages are becoming more affordable for first-time buyers

Average first-time buyer couples in Galway require just under 14% of their disposable income to fund a mortgage, new research has found.

According to the latest EBS Affordability Index shows that nationally, the proportion of disposable income required to fund a mortgage for the average first-time buyer working couple dropped to 19.5% in April 2015.

This is down from 20.6% last October due to a drop in house prices in the opening months of this year.

In Cork and Galway, the figure stands at 14.4% and 13.4% respectively. Longford is the most affordable county in Ireland to buy a home, with a couple requiring only 6.9% of their net income to fund their mortgage.

“The situation has improved dramatically since 2006, when an average FTB couple needed 26.4% of their net income to fund their mortgage, as property prices peaked,” the report reads.

The index shows a noticeable difference between the Dublin housing market and the rest of the country.

In Dublin, a FTB working couple currently requires 22.6% of earnings to fund their mortgage, down from 24.3% in October 2014. A further improvement in Dublin affordability is forecast to 22.1% in June.

The research also ranks counties in terms of housing affordability. Outside of Dublin, Wicklow and Kildare are the least affordable counties, where a FTB couple requires 21.6% and 21.1% of their respective net incomes to fund their mortgage repayments.

Director at DKM Economic Consultants, Annette Hughes, said:  “The benefit of the Affordability Index is that it captures monthly changes in house prices and the other determinants of affordability.

“With the volatile changes in house prices in the opening months of 2015, the positive and negative swings in affordability can be clearly seen.

“The recent upturn in house price in March is probably not surprising given that the market continues to be characterised by pent-up demand, a supply shortage, rising rents and new lending regulations,” she said.

EBS Head of Mortgages, Conal Clerkin said: “The research forecasts that affordability across the first-time buyer market will have further improved in the three months to June.”