The latest mortgage trends illustrate some of the ongoing pressures in Ireland’s dysfunctional housing market. And leave some questions unanswered.
Demand for mortgage loans continues to rise, according to the latest Banking and Payments Federation of Ireland data, but much of this is due to people remortgaging to better position themselves for higher interest rates. New lending for first-time buyers and those moving house, while still relatively high, does not appear to be increasing significantly any more.
Whether this is due to lack of housing supply, affordability issues – intensified by the cost-of-living squeeze – or some fall-off in confidence due to the economic outlook is not clear. All may be playing a role.
There is certainly some cooling in the market. In its latest report, Sherry FitzGerald estate agents note an easing in the “frenzied” level of bidding seen in the recent past. That said, the agency still expects house prices to head modestly higher, given the ongoing mismatch between supply and demand.
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The challenge of providing enough homes is underlined by the latest census figures which show strong population growth. The concern now is that this raises the target for housing supply while, at the same time, higher costs may be leading to some fall-off in building in some areas, notably new housing estates. Many of the properties now being built will end up as build-to-rent apartments.
Although more apartments are needed too, the rental market remains deeply dysfunctional. The Sherry FitzGerald figures suggest that for every one property being bought by smaller investors to rent out, three are being sold. Despite record rents, smaller landlords seem to be leaving in droves, creating a gap in the availability of more affordable accommodation.
The danger for the Government, politically, is that despite the actions it is taking, this problem is seen to be getting away from it. More supply remains the only answer but is not easily delivered.