Stop-gap lending rules limit home ownership to rich

WHEN the Central Bank tightened up on mortgage lending in February 2015, it was against a backdrop of house price inflation running close to 20pc a year in Dublin. The property market was overheating, just as it had done in the run-up to the boom (albeit for different reasons). This time, shortage was the issue.

And just as a mortgage lending war of old looked like kicking off between the recovering banks, the Central Bank, whose role it is to take the punch bowl away when the party gets going, jumped in smartly to snatch away borrowing capacity.

Perhaps we didn’t imagine back then that almost four full years later, shortage would still be the issue. The same stop-gap lending controls are today proving vital in protecting us from property inflation, albeit by keeping thousands out of home ownership.

Fine Gael-led governments have been ideologically opposed to spending on statebuilt social housing. The housing lists began to climb towards 100,000.

It meant those who needed social housing had to find their lodgings in the private sector, throwing them into competition with students, singles and couples who could now no longer get mortgage loans.

No new homes were being built and landlords were pulling out of an increasingly regulated and restricted sector twice as fast as they were investing in it.

The results of today’s Irish Independent/ REA Average House Price Index show that the Central Bank’s measures have now caused house price inflation to slow right down, or even squeak to a complete halt in our cities. However, the intervention has caused numerous other market distortions which have affected Irish society irreparably.

Home ownership has become the status of middle to high earners only. In some Dublin locations, only the rich can now buy a home.

Rents have surged – as those who would have normally bought their own new homes jostle with the homeless, the socially housed, students and single professionals.

Couples who stay in the city are paying more in rent than they would for with the mortgage they cannot get.

Their 10-year-olds have often been moved from home to home and from school to school as leases expire.

Other city dwellers who couldn’t face the insecurity of renting are moving out in droves to locations two counties away. Their commutes will be hours long and their children will suffer because of it.

None of this is the Central Bank’s fault. This time around, the organisation did its duty in a timely fashion. But when it introduced its measures back in 2015, the Central Bank perhaps believed it was providing a shortterm emergency stopgap.

Enough homes for all would ease the pressure on prices and restrictions could be eased in a market which had found equilibrium again. Surely that would only take a year or two?

The Government’s record through those four years speaks for itself.