Agent View: Do we have a housing crisis?
Last year there were just over 48,000 house sales recorded on the property price register. This equates to approximately three house sales per thousand population, which is half the average corresponding level of sales per thousand in the UK and significantly below that of Northern Ireland. Why are house sales still underperforming relative to those of our neighbours?
First, many people are still in negative equity and unable to trade. Second, there are gaps in funding whereby no meaningful level of "buy to let" finance is available from banks and no bridging finance is available to downsizers. Whilst some commentators believe the answer is to provide a monetary incentive to encourage them to move, this is not the entire solution.
But is there a housing crisis? In the day-to-day sales market I believe the answer is no. If there was a crisis, there wouldn't be 4,200 houses for sale in Dublin and 26,000 available nationwide (ex Dublin) on the web this morning. We would have double-digit price inflation in Dublin and all new housing schemes would be sold out. However, we do have a rental crisis as rents are rising sharply due to lack of supply and there is a very serious social housing crisis. The only way to solve both issues is to build new housing supply specifically targeted to these two areas.
The Government appears to be beginning to address the area of social housing by financial investment, which is welcome. However, the problem is considerable and growing and there are currently no real short-term solutions. We have previously suggested to Government that they follow the UK government's lead and provide funding and loan guarantees at high street rates to builders or large-scale investors who will build and rent out housing specifically constructed for social and rental purposes. Part built housing schemes could also be completed for the same purpose. We have proposed that they bundle any vacant local authority housing in their control and sell them to a Reit or fund on the condition that they are refurbished and rented back to the State for long-term social housing. We have also recommended that some form of tax incentives are introduced to try and maintain the number of "buy to let" investors in this space. On top of this, the Government needs to make a fund available, again at high street rates, for general construction, as this would lead to an increase in the provision of general new housing stock.
I believe the sales market is well on the road to recovery, but the social and rental housing crisis will remain in a state of flux for the foreseeable future.
Keith Lowe is chief executive of DNG