Thursday 23 November 2017

Unpalatable action needed to slow our return to crazy boom days

The lack of available housing may also deter companies tempted to choose Ireland in a Brexit-induced retreat from Britain. (Stock photo)
The lack of available housing may also deter companies tempted to choose Ireland in a Brexit-induced retreat from Britain. (Stock photo)
Charlie Weston

Charlie Weston

House prices are set to zoom upwards this year and next. Rises of 10pc by the end of this year and by around 8pc in 2018 are predicted by Goodbody Stockbrokers.

The average house price was €275,000 last year. By the end of this year it is estimated to hit €300,000, and then to go to €320,000 next year.

That is great if you expect to inherit a property and plan to sell it. It is also a good thing if you bought at the top of the boom and are still waiting for your home to return to the valuation back then, as you need to move.

But if you are a potential first-time buyer the prospect of a continuing rise in prices will make you despair.

Twice as many young buyers have mortgage approvals in their back pockets as there are homes to buy. That means a return to the crazy days of new builds being snapped up in a matter of hours, queues outside show houses, and sealed bids and other anti-consumer activities. We are also seeing the return of overseas property expos.

Young people are paying the highest rents ever recorded, yet can't escape the rental trap to buy because of a chronic shortage of homes for sale. The lack of available housing may also deter companies tempted to choose Ireland in a Brexit-induced retreat from Britain.

When it comes to housing madness, it is not as if we have not been here before.

What is it about property in this country that it has such a disproportionate impact on us?

Unless we tear up the system that allows developers to decide when and where to build - and we do not appear to have an appetite for that - we need to grasp some difficult truths.

Builders do not find it profitable enough to build homes at the moment, especially apartments.

We need to relax some of the planning rules for apartments, introduce a vacant site levy to encourage zoned land to be built on and drop VAT for new builds, as they do in the UK. None of that is palatable, but we are in a crisis - and if we do not want it to develop into a new housing bubble, we need to act radically.

Irish Independent

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