Thursday 17 October 2019

Mark Keenan: 'Downward trend is welcome but houses still out of reach for families'

 

There is a long way to go before the price of an average home in the capital becomes affordable once again. Stock photo: Getty Images
There is a long way to go before the price of an average home in the capital becomes affordable once again. Stock photo: Getty Images
Mark Keenan

Mark Keenan

That the prices of average homes are gradually falling in Dublin is certainly good news.

But even adjusted downwards over the past year, the average Dublin three-bed semi price of €428,500 is still running well over €100,000 more than the mortgage that a pair of above-average earners can qualify for.

That means there is a long way to go before the price of an average home in the capital becomes affordable once again.

Please log in or register with Independent.ie for free access to this article.

Log In

Even prices of average estate homes in the traditionally cheaper North County area stand at €320,000 - only just achievable for two above-average earners.

Similarly, static values in Galway city and Cork city are to be welcomed, given prices in these cities had long been rising unsustainably, and were pushing young buyers out to cheaper towns in their county areas in order to find family sized properties they could afford with a mortgage.

Increasing prices in Ireland's bigger rural towns are also a welcome trend. Few scheme homes have been built in towns since the crash in locations where second-hand prices are still below what it costs to build a new home. It is therefore unlikely that badly needed new homes will be provided in these locations until prices reach that magic threshold.

Because the Irish Independent/REA Average Home Index is just that, a barometer of the prices of average properties, it does not tell us that more expensive homes in Dublin are likely falling harder than mid-market properties. Nor does it tell us that the cheapest homes in Dublin are likely still rising in price, as buyers fight it out for remaining affordability.

The survey does tell us that small private landlords are leaving the market in Dublin in droves, enough to contribute to increasing supply noticeably, and to a degree that the REA agents on the ground see fit to comment on it.

On the one hand, this Government is walloping 'mom and pop' and reluctant landlords with high taxes on rental earnings and rent controls.

At the same time, it is enabling their new competitors - the big fund investors from abroad - to acquire entire blocks and to rent them out, with more attractive corporate tax rates paid on the rental incomes generated. They are also permitted to rent them at the highest non-restricted rates.

The bigger picture in Dublin, with Cork and Galway likely to follow, is continued rapidly increasing rents, and the transformation of a market in which ownership is fast diminishing in the face of global commoditisation of residential housing. That is, housing as a big, no-borders, fund investment commodity, like the world trades in cereal or coffee.

Global cities, from London to Toronto, are seeing their residents pushed out of ownership, with the choice of taking the long commute by acquiring a cheaper home far outside the city boundaries, or paying top-drawer rents for smaller spaces controlled by the housing investment giants.

Irish Independent

Today's news headlines, directly to your inbox every morning.

Don't Miss