More family homes and office space needed to prevent property bubble
THE Government is being warned that it needs to act urgently to address the shortage in family homes in Dublin and the country's other major cities to avoid another property bubble.
Writing in today's Sunday Independent, leading economist Colm McCarthy describes the 12.3 per cent annual increase in Dublin house prices as "worrying", coming as it does in the absence of normal levels of mortgage credit.
"Whatever increase is under way in Dublin, to be clear, is happening in the middle of a mortgage famine. If mortgage availability was back to even 'normal' levels, it is a fair guess that Dublin would now be in the middle of a renewed bubble in house prices. There is nothing to celebrate," he says.
The Government's drive to encourage hi-tech companies to set up their operations here is also under threat. Michael O'Flynn – one of Ireland's most experienced developers – warns that the growing under-supply of commercial space is going to be a "major problem" within the next year.
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"We're now in a situation where we're completely undersupplied in terms of appropriately sized commercial properties. This means Ireland is going to be at a disadvantage in terms of housing jobs. I am absolutely certain now that we are going to have a major problem because we won't have the space available to house any new industry," Mr O'Flynn says.
Such is the seriousness of the problem, even Irish-owned firms are giving consideration to relocating their operations and jobs abroad.
Speaking to the Sunday Independent last week, Realex founder and chief executive Colm Lyon, whose company handles payments for firms totalling some €24bn, said: "There are challenges to scaling up in Dublin. You're competing with Facebook and others for both space and talent.
"Multinationals are very important, but you can't neglect indigenous businesses. We're keeping our options open and hedging our bets with London as we expand."
McCarthy, meanwhile, is calling for the immediate zoning of the "very large volume of derelict and undeveloped land in the Dublin area" to allow for badly needed family homes to be built. He warns the Government "needs to get a grip on this situation before it gets out of hand".
Evidence of the emerging housing crisis in the capital is further borne out in the latest housing start numbers from the Construction Industry Federation (CIF). Those figures show that in the first six months of this year, a mere 436 new three-bed house builds were under way, or just two more than the same period last year.
Fianna Fail finance spokesman Michael McGrath expressed his concern, saying: "We are seeing the early signs of what could develop into a bubble in Dublin. Parts of the capital and other major towns are now a desert for those seeking average family homes."