House prices remain firmly on the rise, with the annual rate of increase coming in at 8.6 per cent in June, according to the latest figures from the Central Statistics Office. This confirms the acceleration in house price inflation seen this year, driven by a lack of supply and strong demand from buyers.
The figures are concerning as they show houses prices becoming increasingly unaffordable for many younger people. Prices in Dublin rose by a particularly strong 9.3 per cent, but across the State there are increases in the cost of both new and second-hand homes.
An analysis by the Society of Chartered Surveyors Ireland (SCSI) has pointed to the increasing affordability gap facing many would-be buyers , including two income couples. Many are now priced out, even if they take advantage of State schemes to support buyers. Despite believing that prices in Ireland are now too high, most estate agents expect them to increase further.
The obvious longer-term answer to this is increased supply. But despite some progress in increasing completions, the housing crisis is still not getting the priority it deserves.
Housing in Ireland is among the most expensive and most affordable in the EU. How does that happen?
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This is in part because the Government – and politicians in general – find themselves conflicted in some areas. While a new planning bill is in the legislative pipeline, reform in this area has been way too slow and politicians all too often add their name to objections to housing developments. Meanwhile, the joined-up approach necessary to ensure the required infrastructure in areas like water and power is readily available to new developments is absent.
House provision is, it seems, only a priority to the extent that it does not upset the settled classes of voters too much. The Government has been bafflingly slow to provide the necessary resources in areas such as planning and the courts to try to expedite matters. And the lack of openness of the “system” – politicians and civil servants – to engage in any meaningful way with the report of the Housing Commission tells a lot about the bureaucratic protectionism which stalls real change.
Some progress has been made and some valuable initiatives advanced, but the pace of action is too slow. Way too slow. The space left by the lack of real reform has been filled by a raft of schemes to support supply and try to reduce the affordability gap for buyers. Some have had modest success, others have achieved little. Many have had unintended consequences - the Help-to-Buy scheme has assisted many buyers but has surely also pushed up prices. The same could be said for changes to Central Bank lending rules in 2023.
In the longer-term, the only answer is to address the fundamental issues. Politicians can promise to “deliver” tens of thousands of additional new homes a year, but none will succeed unless the basics are fixed.