Crisis as number of homes for sale plummets 50pc, new data
THE supply of homes for sale in the Dublin property market has collapsed by half in the last year – pushing the capital further into a serious homes shortage crisis.
The data also shows the housing supply crisis is fast spreading to other cities. It was revealed that supply of houses for sale in Galway city has fallen by exactly half.
The numbers of homes for sale in Cork city declined by 35pc in the same period.
There are now fears in the market that the slashing of supply will double house price inflation in the capital to levels approaching 30pc for 2014.
Data released last night by Sherry FitzGerald shows that the supply of homes for sale in the capital has fallen by 54pc in 12 months.
This was from an already critical base as a year ago it was estimated that supply of homes for sale was running at just one third of the numbers of homes required to satisfy demand.
Now there are just 3,025 properties advertised for sale in Dublin for a city of 1.3 million people.
Normal supply levels run between 4pc and 6pc of total stock and there are 500,000 households in the capital. This indicates that the numbers need to be at 20,000 to 30,000 to satisfy pent-up demand.
Sherry FitzGerald's chief economist Marian Finnegan added: "We have never seen anything like this. Supply is now critically low in Dublin.
"At current demand levels we believe the market requires up to 20,000 to be available to stave off significant price inflation. The sort of inflation we're experiencing as a result benefits nobody – not the vendors, not the buyers and certainly not the estate agents. We have moved from one dysfunctional market into another."
The crisis is being caused by a number of factors, namely:
- The lowest level of supply since records began – caused by high local authority taxes on home building, lack of lending to builders, legacy debt among developers and local authorities insisting on apartment type development. New homes normally account for one third of all supply but are currently providing almost none.
- Negative equity – despite the launch of new bank products to enable those with negative equity to move, most of those who bought their homes between 2002 and 2009 are stuck.
- Tracker mortgages – so lucrative are the financial benefits of being on a tracker deal that beneficiaries are not prepared to move and lose them. However, these are now being compounded by new factors that have come into play in the past year, thanks to 12 months of steady inflation of 14pc in Dublin.
- The absence of bridging finance – this means would-be vendors are afraid to sell their homes when trading up for fear of being unable to purchase another property and then losing their proceeds to inflation. It was possible last year to have sold a four-bed in some estates at the beginning of the year only to be unable to buy a smaller house in the same estate for the same price by year's end.
- Holding off for a higher price – those who are trading down in particular stand to benefit in keeping their property back from the market when prices are increasing at more than 1pc a month or between €3,500 and €10,000 on mid- to high-priced Dublin properties.
The analysis shows that in January the total stock in the secondhand market here stood at 37,990 units, showing an annual decrease nationally of 18pc overall.