Growth may have slowed but buyers can’t afford to buy
This was the year when the Central Bank of Ireland’s mortgage-lending rules really kicked in – and boy did they. Most market observers last year predicted price growth of between 9 and 11 per cent in 2018. That figure is more likely to come in at around 5 per cent – definitely a sharper-than-expected cooling off. This has generally been greeted as a good thing. Why, then, does it not feel like it?
Affordability has become a huge issue, particularly for buyers on lower incomes or who borrowed heavily during the last credit bubble. The Central Bank’s mortgage cap of three and a half times borrowers’ income is inadequate as long as wage inflation dramatically lags property-price rises. A couple earning the average wage of ¤40,000 each can expect to borrow just ¤280,000, which pretty much rules out most properties in Dublin.
The Central Bank has declared itself happy with its lending restrictions’ impact on prices, and although it acknowledges that a housing market in balance does not necessarily translate into a market that is affordable for most, it has certainly made it clear it will not be adjusting rules any time soon.
The solution will therefore have to come on the supply side. The Government will feel it tackled this hoary chestnut head on in October, when, before the budget, it launched the Land Development Agency, with its mandate to deliver 150,000 homes over 20 years on tracts of State-owned land. But with the first of these homes not due before 2020, the urgency will in all likelihood have gone from the housing crisis by that time.
These homes will be built in partnership with private developers, who will clearly engage only if the profit motive adds up. It really seems to have been a big win for developers faced with prohibitive land prices in the capital. The release of lands at affordable prices in these areas will be a boon for them, but whether this will translate into more affordable new homes has yet to be seen.
Cost constraints are already very evident in the new-homes sector, from both a supply and a demand perspective. It was expected that 2018 would be the year when the new-homes trickle would turn to a flow, but this has not materialised despite constant reports that we need 35,000 new homes a year. In reality about 17,000 new
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Dowdstown House, Maynooth, Co Kildare ¤3.4mPark Avenue, Sandymount, Dublin 4. ¤4.5m (off market) COUNTRY 1. Dowdstown House, Maynooth, Co. Kildare ¤3.4m, Sherry FitzGerald Country Homes 2. Galtrim House, Dunsany, Co Meath ¤3m Savills 3. Athgarvan House, Athgarvan, Co Kildare ¤2m, Sherry FitzGerald Country Homes 4. The Beach Haus, Bettystown, Co Meath ¤1.525m, Savills 5. Scilly House, Scilly, Kinsale, Co Cork ¤1.5m Engle & Volkers
41 Cowper Road, Rathmines, Dublin 6 ¤4.7m DUBLIN 1. Clonmore, 15A Ailesbury Road, Dublin 4. ¤8.1m, Lisney 2. Lota, 26 Coliemore Rd, Dalkey, Dublin. ¤7.5m, Sherry FitzGerald 3. Ardmore, 34 Ailesbury Road, Ballsbridge, Dublin 4. ¤4.875m Sherry FitzGerald 4.41 Cowper Road, Rathmines, Dublin 6. ¤4.7m Sherry FitzGerald 5.81
34 Ailesbury Road, Dublin 4 ¤4.875m
Clonmore, 15A Ailesbury Road, Dublin 4 ¤8.1m
The Beach Haus, Bettystown, Co Meath ¤1.525m
Lota, 26 Coliemore Rd, Dalkey, Co Dublin ¤7.5m