Business Irish

Saturday 1 October 2016

Dublin house prices have stalled, says home-builder Abbey

Published 12/07/2015 | 02:30

House-price recovery appears to have stalled in Dublin, while prices non-urban areas remain 'very depressed'
House-price recovery appears to have stalled in Dublin, while prices non-urban areas remain 'very depressed'

The house-price recovery in Dublin has "paused for breath" this year and prices remain "very depressed" in non-urban areas, according to the head of the top Irish-listed housebuilder.

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Abbey executive chairman Charles Gallagher told the Sunday Independent that "in terms of supply, overall it can be difficult to square people's assumptions that there's an acute shortage of housing with the prices at which housing changes hands through the country as a whole".

Gallagher said he wasn't talking about prices in Galway and Cork as Abbey doesn't operate there, but that in terms of Dublin matters are "pretty clear cut".

"Once you go out into the outer commuter belt, prices are still at very depressed levels. There was a very strong recovery in the Dublin area, which seems to be pausing for breath in 2015.

"People bandy the word crisis around pretty aggressively really. There seems to be, as widely reported, some distress at the social housing end, where people are struggling to get housing at affordable rents.

"I mean in lots of ways that's a fairly normal situation and one that the Government would need to look at. Outside of the Dublin area, house prices remain very, very depressed. I think there's still some vacancy in some areas, so I think it seems to be an acute shortage in Dublin and probably in some of the urban areas."

Gallagher said there is "obviously" a need to increase building rates.

"The country should be doing that over time to sustain the growth in the economy, and that probably needs to be tackled from both ends. It needs to be tackled from reducing the cost of building a house so it's possible to deliver houses at lower prices, particularly if you're going to have mortgage restrictions that reduce what people can borrow.

"And on the other side of the equation we probably need to make more mortgage finance available, which as the banks heal, is a gradual process."

Gallagher has no "huge problem in principle" with the Central Bank's new mortgage caps.

"I can see some merit to them... but it's like everything, it's how it's applied and how it's implemented.

"But what's right for south county Dublin isn't always right for middle Ireland. If the mortgage caps means the banks don't lend and they want to lend, then that's a concern. But I'm not sure that that's really the case at the moment.

"The real fundamental issue is more just putting the banks in a situation where as a policy they make more money available to the mortgage market.

"I'd be wondering what it is I could do to gradually increase the supply of credit into the economy. If I could see that rising steadily, then I'd be comfortable that the number of houses built would increase.

"We want to see some recovery in the rest of the country. That will drive output... in some places levies [which are charged by local authorities] are still up at €15,000 or €16,000 a unit, which is where they were pushed up to in the boom. They need to think about that carefully and really be sure that the costs that they impose are necessary and needed."

The housebuilder has just posted a pre-tax profit of €49.1m for the year to April, more than double the figure posted last year.

Davy Stockbrokers called the results "stellar". The company is about to start production on new projects in Cornelscourt, Dublin, and Delgany, Co Wicklow.

It is seeking further projects in the Dublin area, Gallagher said.

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