More new builds needed to fix “dysfunctional” property market

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As we enter the closing months of 2016, with the Budget on the horizon, housing – or a lack of it – remains one of the major challenges the country faces.

Figures released this week revealed that 14,000 new homes are due to completed by the end of the year.

However, while that figure is up 17% year on year, it is a long way short of the 25,000 homes that the country needs to be building each year at a minimum in order to service demand.

Property Industry Ireland have already called for an “ambitious budget that matches the ambition of the Housing Action Plan.”

The lack of available homes is pushing house prices and rental prices up, resulting in what was described as a “dysfunctional” property market at last week’s Irish Times Property Forum.

Speaking at the event, Minister for Housing Simon Coveney admitted that new housing starts are “nowhere near where they need to be.”

He said it was the government’s target to get housing starts over 20,000 in two years but admitted that 35,000 new houses a year is “where we should be at.”

It could take 10 years for that to happen though, he admitted, with funding of developments remaining difficult.

Indeed, he called for more finance options to be made available for developers and suggest they partner with local authorities to tackle the severe shortage of social and affordable housing.

Mr Coveney said October’s budget will include measures to help first-time buyers as well as strategic initiatives aimed at the rental sector and landlords.

Whether those planned measures prove successful or not remains to be seen but Davy’s chief economist Conall MacCoille warned that the lack of housing construction was now “holding back the real economy”.

He encouraged Ireland to tackle supply rather than demand issues though “as this will have a greater effect on the market.”