Tuesday 20 February 2018

Why confidence dictates the Irish property market

Brian Dempsey, incoming president of the Institute of Professional Auctioneers
Brian Dempsey, incoming president of the Institute of Professional Auctioneers

Brian Dempsey

Confidence - or the lack of it - poses one of the biggest threats to the Irish property market. In its absence, the market can quickly go into reverse.

While confidence has risen since the low of 2007, the see-sawing of policy and regulation over the past four years has put a dint in it. There was the Capital Gains Tax holiday, then its withdrawal; the Central Bank mortgage lending rules, then their softening; the introduction of the Help-to-Buy scheme - and now, so quickly after its introduction, the threat of its removal.

A solid direction is very hard to find. We wonder whether or not a new property bubble is emerging. That affects potential house-buyers' view of the market. In turn, it makes builders nervous and financiers even more so.

Yet property prices are still 31pc below peak 2007 figures, according to latest CSO data. With the exception of Dublin and some other cities, the price of a second-hand home is still up to 50pc behind that of a new one.

So why is this important? It means we will not have new housing any time soon, rents will increase and those who are homeless will have a much longer wait for housing. Not to mention Brexit. The unknown is always the most feared. And that impacts on confidence.

The demands of our growing economy are already well-documented. We need more homes and more office space, but also more schools and better infrastructure. Housing has overtaken health in the national conversation.

Our high VAT rate is an issue. Vacant homes abound, many in the hands of banks or receivers. Legislative changes, such as that which ensures pre-'63 properties favour single rather than multiple occupancy, puts further pressure on rents.

The introduction of Rent Pressure Zones is resulting in more generous landlords looking to actually increase rents to market level, or evicting tenants in favour of sale.

Last week one of Dublin's leading agencies cited non-viability arising from new onerous legislation and administration as their reason for exiting management of single-unit lettings.

These are but a few of the many problems around which no consensus yet exists on the answers. Could it be that our new Government can show itself capable of looking at the property market urgently and in its entirety for the first time? Let's hope so.

  • Brian Dempsey is incoming president of the Institute of Professional Auctioneers and Valuers, and a partner with DNG Property Group

Sunday Independent

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