An enterprising trio of aspiring homeowners in Swords, Co Dublin has, since last Tuesday, been queuing – day and night – to buy new houses that will go on sale there on Saturday. Their action confirms what we already know, namely, that there is an acute shortage of new housing in Dublin. An estimated 2,000 new houses will be built in the capital this year, according to the Construction Industry Federation; far fewer than is needed.

The Swords housing development is the first new housing estate in the area since the financial and property crash. But a queue involving a handful of house hunters is hardly early evidence of an incipient property bubble. This is not a return to the heady days of financial excess that marked the Celtic Tiger era. Then, at the peak of the property boom, buyers formed far larger queues to buy houses off-plan – before they were built – and at greatly inflated prices.

Since the property bubble burst, national house prices have fallen by 50 per cent from peak to trough. With too few new houses under construction, overall housing demand greatly exceeds supply, and the price of second-hand homes, mainly in Dublin, has soared. The financial incentives offered by Government to revive the property market have not worked as intended. A low (1 per cent) rate of stamp duty is levied on house purchases, and property bought before year-end, and if held for seven years, is exempt from capital gains tax. These tax incentives have greatly benefited property investors and cash buyers, but have done little to assist first-time buyers. Banks remain reluctant lenders, either to finance property development or to extend mortgage credit to home buyers.

The banks may well be anxious to conserve their capital, pending the results of the Europe Central Bank’s stress tests of national banks, which are due out next month. These should give banks the confidence to start lending again both to those who build houses, and those who buy them.