Sunday 18 August 2019

Charlie Weston: 'Big buyers with more firepower are creating a lost generation of renters'

 

'Cash buyers will always trump buyers armed only with mortgage approval' Stock photo
'Cash buyers will always trump buyers armed only with mortgage approval' Stock photo
Charlie Weston

Charlie Weston

Pity first-time buyers. They are being assailed from all angles. Property prices nationally have increased by 83pc from the low in 2013. But unless new buyers get one of the scarce exemptions, they can borrow only three-and-a-half times their income.

The income restriction means that prices have moved beyond the capacity of most potential new buyers to afford them. This is a circle that is becoming increasingly difficult to square.

Then new buyers are competing hard with a range of others who have far more financial firepower than them.

Cash buyers will always trump buyers armed only with mortgage approval. The cash buyers represent around a third of the purchasers out there. But there is a new threat - institutional investors and housing charities.

Investors literally have billions of euro that enables them to buy up entire apartment blocks to rent out. They have identified that our dysfunctional housing market is unlikely to ever be able to supply the volume of homes at prices that are affordable for ordinary buyers.

Also squeezing out potential new buyers are well-funded housing associations. These bodies are typically Government-funded, but are not averse to buying up whole housing blocks, even though concentrating social and affordable housing in a single unit is considered poor policy.

The State should be supporting the building of homes, not funding their purchase.

As things stand, one of our largest housebuilders, Glenveagh, reckons we may never reach the 35,000 units a year analysts believe we need. No wonder the numbers approved for a mortgage in January fell.

All of this means the aim of home ownership is becoming a distant dream for many.

This societal change will create a lost generation of frustrated and broke long-term renters.

Irish Independent

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