There has been a sharp move away from buy-to-let mortgages to fund investments, according to the latest Housing Market Monitor from the Banking and Payments Federation Ireland.

The monitor shows that property investors accounted for less than 1% of all mortgage drawdowns in 2020 compared to 20% of mortgage drawdowns in 2006. 

Today's research shows that lenders continued to support the residential mortgage market in terms of mortgage market activity in 2020 with 35,617 mortgage drawdowns - valued at €8.4 billion - granted. 

It also reported a total of 43,151 mortgage approvals in the same period with the total value reaching €10.3 billion. 

BPFI noted that nearly 44% of total mortgage approvals in 2020 took place in the last four months of the year, which it said provides a significant potential pipeline of activity in terms of drawdowns in early 2021.  

The latest mortgage approvals figures show continued annual growth in January 2021, rising by 2.8% compared with the same month last year, reaching €823m, it added. 

Brian Hayes, the chief executive of BPFI, said the supply-demand imbalance in the housing market will continue in 2021 as Covid-19 limits housing supply while demand remains strong especially among households less affected by the pandemic and non-household investors. 

Mr Hayes said recent analysis shows a significant decline in the role of individual buy-to-let (BTL) investors in the market in recent years. 

"At the peak of the mortgage activity in 2006, BTL loans accounted for around 20% of total mortgage drawdowns compared to less than 1% in 2020," he said. 

"At the same time, there has been a marked increase in the role of non-household buyers which includes private companies, charitable organisations, and state institutions who now account for 23% of all market transactions, up from 3% in 2010," he added.

He also said that while demand for housing remains strong, there is continued uncertainty around housing supply due to reduced capacity and output in construction caused by Level 5 restrictions so far this year: 

"The pandemic will continue to have a negative impact on housing completions in 2021 because construction activity is not expected to fully start again until April 2021, at the earliest, assuming public health developments remain positive," he said. 

But he added that the sector had gained more experience in terms of increasing output after the first lockdown last year, and so the BPFI expects completion numbers in 2021 to be at least similar to levels observed in 2020 at around 21,000 units.

"Given supply disruptions in the residential construction sector in the first quarter of 2021 and the expected continued demand for housing from certain cohorts of income earners as well as the non-household sector, it is likely that the supply-demand imbalance in the Irish housing market will continue during 2021," Mr Hayes added.