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Mortgage Line Blog, for the latest property and mortgage news

KBC Homebuyer survey suggests homebuyer demand strong and set to continue to run ahead of supply

Posted on by Stephen Hamilton

  • Weak supply boosting Irish property prices but pent‐up demand also hugely
    important.
  • Depressed levels of transactions in recent years means large numbers are not in the
    right homes for their current life‐cycle stage
  • Home sales now just over half the level that might be seen as healthy (48,000 v
    80,000+)
  • Survey finds increasing share of first time buyers among prospective purchasers as
    ‘help to buy’ scheme and easing of CBI limits take effect.
  • Survey estimate of 70k ‘ready and able’ prospective purchasers suggests demand
    set to run well ahead of supply

Monday, 11th April 2016: Today KBC Bank Ireland releases the second research findings of the KBC Homebuyer Sentiment survey. The survey highlights that while attention is rightly focussed on
inadequate levels of new housing supply, the KBC Homebuyer Sentiment Survey suggests the
current strength of Irish house prices also owes a great deal to pent‐up demand that is now
emerging with some force.

The survey finds a strong pipe‐line of demand is now emerging as depressed home sales in recent years mean many consumers are experiencing a mismatch between their current housing circumstances and the accommodation they want.

The survey suggest only half (49%) of Irish consumers are entirely content with their current housing
circumstances. Another fifth (23%) are not in a position to contemplate home‐buying. This means
that about one in four consumers (28%) is now at least considering buying a home in the next two
years with roughly half of these already planning their purchase.

As housing transactions through the past seven years have fallen about 40,000 ‐ 50,000 short on
average of what might be considered healthy, it is not surprising that the survey finds evidence of a
significant overhang of ‘pent‐up’ homebuyer demand at present. The upper boundary to this
demand could be as high as 300,000 over the next two years but we would focus more attention on
the estimated 70,000 who are currently ’able and willing’ to purchase a home.

In the context of transactions of just under 48,000 in 2016, this points to a continuing excess of demand over supply. Austin Hughes Chief Economist KBC Bank Ireland, who analysed the research said ‘To properly understand what’s happening in the Irish property market today, we need to look at what is
happening to demand as well as clearly inadequate supply.

The KBC homebuyer survey suggests a pipeline of unsatisfied demand is building both because of new entrants to the property market and because many existing households face a significant mismatch between their current accommodation and the housing they need. In turn, this suggests the current pressures on housing may be even greater than is often suggested’.

The KBC Homebuyer survey finds little evidence of a ‘buyer frenzy’ in as much as would‐be
purchasers are slightly more cautious about their own household finances and the outlook for the
broader economy. Instead, there are signs of significant frustration that buying plans may not be
realised with less than half of those surveyed (47%) notably confident they will have bought within a
two year timeframe.

Of those now able and willing to buy roughly equal numbers are first‐time buyers (38%) and movers
(38%), with demand from investors (23%) accounting for a smaller proportion. However, the survey
finds that the proportion of first‐time buyers at the early stages of the home‐buying process is
increasing markedly to around half of potential purchasers (53%). This step‐up may be the result of
greater confidence in the economic outlook and could also reflect improved access to credit but as
these aspects affect all potential purchasers more important influences may be the Governments
‘help to buy’ scheme and the easing of the Central Bank’s lending limits.

Commenting on the research Darragh Lennon, Director of Products KBC Bank Ireland said:
“Enquiries from all home buyers, including First Time Buyers, have been strong in the first quarter of
the year. Over 400 First Time Buyers attended the KBC Mortgage Lounge, a great event where people
gained valuable information on the entire process of buying their first home.

“We have seen a strong uplift in applications as we continue to offer great value to all mortgage
segments. We were awarded the Best Value First‐time Buyer Mortgage and Best Value Switcher
Mortgage at the inaugural bonkers.ie Awards. We were delighted to receive these awards which
acknowledge that KBC offers best value to consumers across our range of products.”

Posted in
First Time Buyer, House and Home, Mortgage Interest Rates
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