Where house price growth is highest and lowest as the average deposit for Dublin home tops €50k

The average first-time buyer had an income of €77,000 and a deposit of €52,800 saved up before buying a home in the capital during 2017.

Dublin home-buyers have been faced with taking on "higher levels of mortgage debt" despite strict Central Bank lending rules designed to cool the market.

House prices are expected to continue to rise in 2018 but at a slightly slower pace due to a tightening of the lending rules, according to the latest house price report from MyHome.ie.

The report, which is published in association with Davy, predicts house prices will rise by 8pc overall in 2018, split between double-digit growth outside the capital and a rise of 6pc or 7pc in Dublin.

The median asking price for new sales nationally was €242,000 in the final quarter of 2017. In Dublin, the median price was €330,000 (up 6.2pc), and €195,000 (up 6.3pc) in the rest of Ireland.

The report notes that the Central Bank of Ireland has tightened its mortgage lending rules for 2018, which will affect trader-uppers.

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First-time buyers (FTB) and second and subsequent buyers (SSB) mortgages are capped at 3.5 times income, known as the loan-to-income (LTI) limit.Up to last year, banks or other credit institutions could issue loans with up to 20pc of the combined value of FTB and SSB mortgages allowed above the 3.5 LTI ratio.

Under the revised measures, the proportion of mortgages allowed above the cap is split into separate FTB and SSB categories.

As of yesterday, 20pc of the value of new mortgage lending to FTBs can be above the LTI cap, but only 10pc of the value of new mortgage lending to SSBs can be above the LTI cap.

Conall Mac Coille, chief economist at Davy, said the tighter Central Bank rules will serve to slow house price inflation in Dublin.

"Asking prices have fallen in the final quarter of each of the last five years before bouncing back in the spring and we see that pattern continuing in 2018.

"However, due to the Central Bank tightening its mortgage lending rules we believe house price inflation in more expensive areas, like Dublin, will slow somewhat to around 6pc or 7pc," he said.

"Homebuyers in Dublin have been taking out higher levels of mortgage debt, but with the availability of credit constrained, further price increases will also be curtailed slightly in 2018.

"However, double-digit price gains are likely to continue outside the capital where the recovery began later, prices are cheaper and there is still scope for leverage on mortgage lending to rise."

Turning to the average income and deposit required to buy a home, Mr Mac Coille said: "The median first-time-buyer in Dublin during the summer had an income of €77,000, a deposit of €52,800 and purchased a home worth €321,000.

"This meant in Dublin the median house price-to-income ratio for first-time buyers was 4.2 [times income]. However, prices are less stretched in other areas of the country.

"The median first-time-buyer in Leinster had an income of €56,000, deposit of €22,000 but purchased a house worth €179,000 - implying a house price-to-income ratio of just 3.2 [times income]."

He also noted that there was a positive side to rising house prices, in the reduction of people trapped in negative equity.

"Many Irish households have been unwilling to move home due to their stretched finances, specifically their lack of housing equity," said Mr Mac Coille.

Managing director of MyHome.ie Angela Keegan added that housing market transactions overall grew by 10pc in 2017 which also was a positive development.

"While the increase in transactions - it should come in around 55,000 for 2017 - is welcome the overall picture is that of an illiquid market hindered by the lack of fresh housing supply. If the Irish market was functioning properly we would be seeing around 90,000 transactions per year."

The average time to 'sale agreed' was just 3.8 months nationally and 2.8 months in Dublin.

"These figure show that whatever stock is for sale is sold ever more quickly," added Ms Keegan.

MyHome uses the median price or the 'middle price' as an average for its calculations.