THE PERCENTAGE OF Irish house purchases by investors in the first three months of the year has shot up to 43% of the market, compared to just 13% for quarter one 2013.
By contrast, owner occupier groups now account for just over 52% of the transaction market.
The figure is contained in a report on the residential housing market by Savills.
The property consultancy has also seen a reduction in the amount of cash sales, which nevertheless still lead the market with 52% of overall sales, down from 63% of deals in Q1 2013.
Cautious renters
Savills director of research John McCartney said investors are snapping up properties to fuel increasing demand for rental apartments, rather than it being a case of investors crowding out first time buyers.
“It’s not particularly useful to look at this in terms of one group driving another one out.”
McCartney argued that while there is a cohort of renters who would rather own their houses, many renters are cautious after seeing their peers loaded with negative equity and are afraid of getting their fingers burnt.
“Some will have been forced into renting by financial distress, others will have taken a lifestyle choice.”
The size of the rental market has increased to 474,000 households in the 2011 census, compared to 323,007 in 2006.
“Part of what we saw was a kind of latent desire from some people not to be saddled with debt, not to go into that owner-occupier category.”
Volatile
Until the house price market is less volatile, with fewer price peaks and troughs, he said that many renters will be happy to sit on the sideline rather than rush headfirst into a market which has hurt many in their situation before.
Prior to this, people were wary of renting because they felt they were missing out on houses that were rapidly increasing in worth.
“A lot of our problems were caused because people got embedded expectations of future price growth, so sitting in the rental market didn’t add up.”
Until house prices, and expectations of house price growth are tamed, many renters will steer clear of the property market.
The renter is a large and increasing part of the market, and I think it’s with us and it’s here to stay.
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