Tax breaks could help free up homes for young families
THOUSANDS of homes for families could be freed up if "empty nesters" were given tax breaks to encourage them to sell up and move to smaller properties, an economist has said.
A chronic shortage of family type homes has seen prices in Dublin surge by 12pc in the past year.
Just 2,000 new homes were completed in the July to August period this year, according to the latest housing market monitor from the Irish Banking Federation.
Many of the homes that are being bought have only come to the market because the owner has died.
But economist with specialist bank Investec, Philip O'Sullivan, said tax incentives could be used to help boost supply in the greater Dublin area.
Mr O'Sullivan, who compiled the banking federation housing market monitor, said this would encourage older people whose families had grown up and left home to trade down to a smaller house or apartment, possibly in a rural area.
"In the absence of any meaningful new build activity, in order to help moderate the current upswing in Dublin prices, policymakers should consider introducing tax measures to encourage 'empty nesters' to trade down, thus alleviating the current shortage of family homes in the city," the economist said.
These empty nesters could be given tax relief to spur them to sell, he said. And this could help counter the fact that property prices have fallen by half since 2007.
The shortage of family homes in Dublin and commuter counties Louth, Meath, Wicklow and Kildare poses a real economic threat and needs to be tackled.
He said that almost a third of the population lives in the Dublin seaboard, and more than half of all IDA Ireland-assisted jobs created this year were near the capital.
Most of the indicators of housing market activity are trending upwards but the market overall remains at the stabilisation stage, Mr O'Sullivan said.
According to the survey, there has been a 30pc increase in the number of properties listed for sale.
There has also been an increase in the number of housing market transactions and a rise in the level of mortgage drawdowns.
But further recovery in the market is being hampered by negative equity -- where the value of properties is less than the amount borrowed to buy them.
Families that over-borrowed during the housing boom were also unable to get funding to move to new properties, Mr O'Sullivan said.
It is too soon to say the market is in full recovery mode, but Mr O'Sullivan described it as being in a "stabilisation" phase.
And despite recent increases in house prices in Dublin, he played down talk of a property bubble in the capital, saying prices were very low to begin with.