Grim pic­ture for home­buy­ers

The Irish Times - - Business News -

Prospec­tive home­buy­ers will hardly be danc­ing in the street about the news that the vol­ume of new home com­ple­tions is con­tin­u­ing to in­crease by dou­ble-digit per­cent­ages.

Even though the num­ber of new com­ple­tions rose by 23 per cent in the third quar­ter, that’s a lower rate of in­crease than in the pre­vi­ous two. In to­tal, some 12,500 new prop­er­ties have been com­pleted this year, a fig­ure that is well be­low what the State needs to ser­vice the ex­ist­ing de­mand.

It’s also worth not­ing that the head­line fig­ure dis­guises the real level of avail­able prop­er­ties.

Firstly, all of th­ese new homes haven’t been or won’t be on sale to the gen­eral pub­lic. Of the new prop­er­ties, more than a quar­ter are known as “sin­gle homes”. Th­ese are ef­fec­tively one-off houses, the ma­jor­ity of which are un­likely to trou­ble the hous­ing mar­ket any time soon, if ever.

Then there’s the woe­fully low level of apart­ment con­struc­tion – only 1,624 were built in the first nine months of the year, or 13 per cent of the to­tal new prop­er­ties. This comes de­spite rec­om­men­da­tions from a raft of ex­perts that build­ing up is the way for Dublin to ad­dress its chronic hous­ing short­age. Even with that low level of apart­ment con­struc­tion, they’re not ex­actly guar­an­teed to flood the mar­ket ei­ther, what with the ever-grow­ing trend of in­sti­tu­tional in­vestors buy­ing fully com­pleted apart­ment blocks. Although Davy econ­o­mist Con­all MacCoille sug­gests apart­ment con­struc­tion will rapidly in­crease con­sid­er­ing the “surge of plan­ning per­mis­sions in re­cent years”, that’ll mean pre­cious lit­tle to those shelling out high rents while try­ing to save for a de­posit. The other prob­lem is that house prices are still rapidly in­creas­ing. Even though the rate of in­crease has dropped rel­a­tively sig­nif­i­cantly, the fact that sup­ply is such a dis­tance from de­mand means there’s lit­tle prospect of af­ford­abil­ity im­prov­ing any time soon. This is an un­ques­tion­ably grim pic­ture – par­tic­u­larly for first-time buy­ers hop­ing to get out of the pri­vate rental sec­tor. And while the num­bers are go­ing in the right di­rec­tion, the pace of their move­ments leaves a lot to be de­sired.

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