Central Bank mortgage caps drive housing market weakness - Davy
The Central Bank's mortgage caps are driving weakness in the Irish housing market, according to a new survey by Davy Stockbrokers.
The survey says the market is "clearly characterised by stagnating prices and an undersupply of land."
It says the market is weaker than developers may have expected at the beginning of the year - particularly in Dublin.
"Volumes and prices are generally behind builders’ expectations six months ago. This has been primarily driven by headwinds to lending created by the Central Bank’s macro-prudential rules, limiting bank lending in relation to loan-to-value and loan-to-income ratios. Affordability has also been highlighted as a problem for customers."
"The results indicate that the land market remains, for now, locked in a state of stubborn undersupply coupled with very competitive demand...however, the need to build additional homes in Ireland continues to create plenty of demand for housing and therefore for land from developers."
However, the report says the medium-term outlook is positive.
"With a return to expansionary budgets, and a significant medium-term demand for housing in Ireland, we believe that the outlook for Irish builders remains positive. Builders are noticeably more positive on the medium-term outlook."