It can be hard to get to grips with the multi-faceted nature of the housing crisis. But there are increasing signs that key parts of the markets are stuck, with low transaction levels. In turn this has wider consequences.
The latest evidence comes in figures from Sherry FitzGerald, Ireland’s largest estate agents, which show an extraordinary lack of supply on the second-hand market. There were just 13,750 second-hand properties listed for sale in July, down by over 10 per cent on a year earlier and almost a quarter lower than summer 2020.
Particularly notable is the lack of supply at the lower end of the market, with the most significant decline in supply being among homes costing less than €200,000 – those suitable for many first-time buyers. Just 2,900 houses across the State were available in this price category, a dramatic 55 per cent fall in just three years.
The precise reasons for this are unclear, but higher interest rates will be making it more difficult for people to trade up by hitting affordability. And inadequate supply in the new homes market also limits the options for those who might otherwise put their house on the market, for example to move to a newer, smaller house or apartment.
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This lack of supply, combined with affordability constraints for potential buyers and renters, cascades through the market. Recent ESRI figures showed that home ownership rates among 25- to 34-year-olds fell from 60 per cent in 2004 to 27 per cent in 2019. Meanwhile, Eurostat data show that more than two-thirds of 25- to 29-year-olds in Ireland live at home, a reflection of rental costs as well as the challenge of buying.
Changing lifestyle trends may be a factor, too, with people studying longer, delaying their move into the workforce. But the gummed up nature of the Irish housing market and the lack of supply for buyers and renters at all levels has increasingly led to people living in accommodation they would not choose, whether it be in the family home, squashed in with other renters, in a house that is now too small, or indeed one that is too big. More supply at all levels is the only answer.