Monday 23 July 2018

Capital needs cheaper homes, not higher debts

There is a property bubble on the way, says Colm McCarthy, and planning restrictions on the outer suburbs are having a significant negative impact

Crisis: The dysfunctional property market has already re-emerged just a few years after the biggest housing bust in the country's history
Crisis: The dysfunctional property market has already re-emerged just a few years after the biggest housing bust in the country's history
Colm McCarthy

Colm McCarthy

There is another house price bubble under way in the Dublin area. Notwithstanding the efforts by the Central Bank to keep mortgage credit under control, some extraordinary prices have been quoted recently for the small parcels of land that become available.

A site with planning permission is for sale on Vernon Avenue in Clontarf, on the north side of the capital. This is a nice area, close to the sea and only about four kilometres from the city centre.

The site is small, just under an acre, which equates to half a soccer pitch or about seven tennis courts. The permission is for 17 three-bedroom houses, so it will be a bit of a pinch. The guide price quoted for the site is €3.85m, which works out at an average €226,471 in site cost per unit. Given construction costs on smaller sites in the city and the various levies and taxes, if building goes ahead, these homes will need to sell for prices in the €500,000 bracket.

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