Attempts to ease the shortage of new homes for first-time buyers appears to be finally succeeding with the launch this week of the largest number of new developments for at least two decades. Most of the 16 schemes going for sale this weekend in the greater Dublin area are starter houses and apartments. Prices generally have stopped rising in recent months because of uncertainties in the property market.
The rush to launch new schemes comes after an encouraging start to the new selling season, with most agents reporting strong sales among first-time buyers over the past two weekends. Sales of the more expensive four-bedroom detached homes have been slower because of the surfeit of second-hand homes overhanging the market. The most recent reduction in mortgage rates is likely to help sales of the cheapest homes in particular.
The busy period ahead in the new homes market is not expected to be prolonged because of a significant fall in new homes starts recorded by HomeBond. New homes specialist Hooke and MacDonald says in the eight months up to September 1st, new homes starts in the Dublin area fell by 5.3 per cent to 5,960 units. The slowdown was even more pronounced in Cork, Galway, Limerick and Waterford where the number of starts fell in the same period by 31 per cent to 4,388 housing units.
Ken MacDonald of Hooke and MacDonald says housing starts are "clearly in free fall at a time when there should be an acceleration in supply". He attributes the fall-off to the withdrawal of mortgage interest relief from investors, the obligation to provide social housing on all sites and the two-year withering of planning permissions.
Sales of developments land have already slowed down and several high-profile sites including Clancy Barracks in Dublin have failed to find buyers. The lending institutions are reluctant to fund sites, particularly those which do not have full planning permission.
The contraction in the new homes market has already led to a slowdown in sales of starter homes in outlying commuter areas such as Dundalk, Navan, Kildare and Gorey.
