Level of New Dwellings Transacted is “Paltry”
Responding to the CSO Residential Property Price Index for April, Brokers Ireland said the low level of new dwellings being transacted is “paltry” – just 18.2pc of all transactions, marking a drop of 8.6pc on the same month last year.
Diarmuid Kelly, Chief Executive at the organisation which represents 1,250 Broker firms, said: “There is a major problem with not enough homes being built to come anywhere near meeting the demand estimated by the ESRI to be of the order of 35,000 per year, with estimates of new builds for this year running at about the 20,000 level.
“While there would appear to be a flurry of interest by institutional investors in building to rent, aided and abetted by superbly generous tax breaks, young aspirational home buyers in contrast must pay an exorbitant series of taxes and levies than can add up to one third of the price of a new home. The really ironic thing is if they can qualify for a mortgage, they will be paying interest rates for the lifetime of the mortgage on these upfront State taxes.”
Diarmuid Kelly.
He added: “It is ‘a deeply unhealthy situation’ where people who cannot acquire mortgages because of the combined factors of insufficient homes being built and strict mortgage lending rules are forced to rent in a market where rental levels are substantially higher than repayments on a mortgage would be, even allowing for a 2pc rise in interest rates, which is not even on the horizon.”
He said studies invariably have found that home ownership is critical to the growth of personal wealth over the longer term.
“We need more homes for purchase and for rent. Home ownership in Ireland has declined from 80.1pc in 1991 to 67.6pc in 2016 according to census figures. This is a negative trend that carries huge implications for society. A State that cannot use its policy levers to deliver new homes when demand is so strong with rental prices outstripping the costs of mortgage repayments in every area of the country, and substantially so in many areas, is still in deep, deep trouble,” he warned.
He said none of the interventions in the housing market over recent years seems to be making “any kind of meaningful impact in terms of delivering homes at affordable prices.”
