Determining viable property prices based on economic conditions is always a tricky task. Nonetheless, the real estate market in Ireland appears to be exhibiting signs of over-exuberance with prices soaring at an annual rate of more than 10% in August, based on the latest figures from the Central Statistics Office. Prices now stand over 13% above the 2007 peak.
Granted, the economy has seen substantial expansion in the interim years and inflation has led to a swell in wages and prices. However, with the soaring prices, property ownership is becoming an elusive dream for even dual-income households. There is also a visible trend of properties being marked up considerably above the initial cost.
By their nature, there will always be potential buyers able to afford this price bracket. It’s reported that salaries are on an upward trajectory, particularly in multinational-dominated industries and professional services. Nonetheless, the increasing unaffordability is disenchanting a growing number of people as the property ladder appears to extend out of their reach. This malaise affects both first-time homebuyers and those looking to relocate amid dwindling property supply. It’s noteworthy that the volume of transactions in the market is dwindling.
Post-financial crash banking guidelines restricting lending limits to individuals and developers have been set in place. This implies a repeat of the 2008 crash is highly unlikely. Still, with the continuous price inflation, new buyers find themselves vulnerable to any adverse shift in the jobs market or broader economic landscape.
Currently, the housing market shows no indication of a downward shift. Quite the opposite, the scarcity of properties and reducing interest rates might see prices continuing to escalate into 2025, barring any unexpected economic turmoil. The affordability crisis might commence acting as a deterrent to inflating prices, but predicting this in an unstable market is challenging.
Certainly, escalating the number of supplies is a predominant policy matter. Although construction rates have experienced a rise in the past few years, they are still significantly inferior to what is obligatory, primarily in specific market segments, such as smaller properties ready for purchase.
As we approach a major election, the Government needs to acknowledge that it is time for a fresh policy direction. The planning bill, which was recently approved and enacted, could be a component of this, even if there are lingering doubts in the industry about certain aspects. However, a broader initiative to develop housing on a large scale is deemed necessary. The government’s response to the Housing Commission’s report has demonstrated a regrettable unwillingness to welcome innovative policy methods and frameworks throughout the entire State system.
This needs to be rectified. Both the Coalition and the Opposition, where Sinn Féin has already put forth a comprehensive strategy, need to convince the constituents that they are capable of fulfilling housing expectations.