More than half of mortgage brokers are reporting that they are approving fewer loans than a year ago, according to a survey by Davy Stockbrokers.
The stockbroker is also forecasting that the number of new homes built will decline for the first time since 1993. It expects 82,000 houses will be completed this year compared with 88,200 last year.
Davy Stockbrokers says house prices have been flat for the past six months, and it expects prices to be unchanged month-by-month throughout 2007.
Six interest rate rises since December 2005 have made it harder for young people to buy property. Davy says a couple who in the past were marginal as to whether they would get a loan now need 5% more disposal income.
As first-time buyers find it harder, rents have also risen by 7% in the last year.
In 2001 the number of new homes bought by first time buyers was 63%. Now that figure is 33%. But the fall in new houses being built will have an economic side effect. Every drop of 10,000 in the number of completions will slice one percentage point off economic growth.
