Bubble, Bubble, Toil and Trouble!
by Bregs Blog admin team
Are house prices susceptible to large jumps until the supply is fixed?
Ireland’s fascination with house ownership and prices seems to be continuing unabated if this week’s newspapers are anything to go by. Both the Sunday Independent and Sunday Business Post feature articles on how to solve the perceived housing crisis and property price bubble that has appeared in some urban areas most noticeably in Dublin.
Both articles identify a possible problem with a shortage of credit for insolvent developers who cannot get the funds to begin building. However the articles differ in the availability of “shovel-ready” house projects with the Independent claiming that Dublin has three year’s supply of sites with planning permission and the Sunday Business Post stating that permission for 46,000 units may be due within a year.
Earlier in the week both the Irish Times and Irish Examiner had pieces on “the bubble”. Conor Pope in Thursday’s Irish Times wondered if it is “a sustainable recovery or another bubble waiting to pop?” Earlier this month we posted Dr. Constantin Gurdgiev’s take on this issue. He wrote about the possible factors behind Ireland’s recent robust growth in residential property prices and that the current upsurge may be a levelling-off of a previous over-correction in the market. In direct contrast to his theory, Tom Parlon of the Construction Industry Federation has been claiming since May this year that the housing market in Dublin will be susceptible to large house price jumps until the supply issue is resolved.
With the newspaper articles’ focus on finance there is no mention of the impact of the new Building Regulations on construction costs or on the programme for the delivery of new housing units. There is certainly no suggestion of a change in the way the Government should think about providing housing as proposed by Housing Agency Chief, John O’ Connor during the week. Mr. O’ Connor said that while supplying stock for families must be an immediate priority, there will be smaller households and a greater need for apartment dwellings in the future. He said: “55% of our new housing stock will be needed for single-person households, or two-person households.”
We will leave the last word to An Taoiseach, Enda Kenny who is quoted in Friday’s Irish Examiner:
“I don’t accept there’s a bubble, but I do accept that prices are rising because of the law of supply and demand……..”
Note: we are unable to provide a link to the Sunday Business Post
BRegs Blog Admin Team
Other posts of interest:
Commencement figures- June 25th 2014 – click link here
How developers are “adapting” to the new Building Control regulations – click link here
CIF: “extend inspections to stamp out shadow economy” – click link here
UPDATE: Construction Industry Register of Ireland – click link here
CIF Construction Confidence Survey – click link here
Opinion: Are builders + developers off the hook with BCAR? – click link here
CIF suggest self-building no longer possible after March 1st 2014 – click link here
Press article: Government promotes developers over self-builders? – click link here
Self-Builders escalate to Europe: BC(A)R SI.9 – click link here