There may be trouble ahead for the housing market

There are few economic certainties in this pandemic age. But one thing looks nailed on: the Irish housing market is in for a period of renewed volatility in coming years.

The Government has a long list of economic tasks in its to-do tray, but Ministers would be wise not to take their eyes off the medium-term housing ball. As the last government – punished in the February election for its failures on housing – will attest, the issue can swamp all others.

Two separate reports this week lend weight to the assumption that the Irish housing market could be mercurial in coming years.

First, research from the Economic and Social Research Institute predicts a future supply shortage is in the works because of delays in building due to lockdown, and difficulties in sourcing development finance from banks.

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The ESRI says this shortage may coincide with a surge in demand for housing once the pandemic is over, as the fruits of an elevated savings rate are unleashed on the market.

The second report backing up the theory is the quarterly asking prices survey on Thursday from Myhome.ie and Davy stockbrokers, which showed an unexpected spike in asking prices of more than 5 per cent nationally.

It suggests demand in the market has been largely unaffected by Covid-19 because most would-be buyers have been able to work from home through lockdown and have not seen their incomes hit, unlike the cohort of renters working in shops and restaurants that have been relegated to the pandemic unemployment payment, a form of dole.

Yet many of those in middle-class jobs working from home may find themselves unemployed next spring, if a cash-strapped State goes ahead with its plan to unwind the wage subsidy scheme that has kept some of them from redundancy. That could result in another slump.

Long sought-after equilibrium and stability in the Irish housing market looks as far away as ever.