IPAV have recently proposed new measures to tackle the housing crisis and to reduce the cost of new home prices.
The document is aimed towards the new government and has a range of suggestions;
- Incentivise builders by providing finance at interest rates of between 1% and 3%. The current high rates of interest of 15 to 20% is prohibitive and obviously these costs are passed on to the home buyer
- They are also asking for the Department of Environment, Community & local government to be enabled to provide finance to builders who may be willing to participate in an “Agreed Price Building Scheme” which would be in the region of €100 per sq ft, excluding site costs and works. The estimation is that this could slash €25,000 from the cost of a typical home
- A VAT reduction from 13.5% to 9%
- A ministerial post for the housing sector
- Increase the loan to income ratio from 3.5 times salary to 4 or 4.5 times
- A review of the recently introduced Vacant Site Levy of 3% to ensure it serves the purpose of builders not hoarding land
The social issues underpinning the housing market are too many & varied but to mention a few being encountered are couples being forced to rent when in the past they would have had the means to buy; the challenge of saving for a deposit while renting, shortage of suitable properties for first time buyers.
Separately but on the theme of the current housing market, Mark Keenan Residential Property Editor of the Irish Independent says “ Houses in Dublin are desirable and yet nobody seems able to buy them”
He goes on to say that as houses in Dublin are desirable, we can assume that the value slippages being experienced in Dublin are a result of reduced buyers due to the lending restrictions.
At the current 3.5 times salary and assuming a joint salary of 80k which qualifies for a mortgage of 280,000, it is clear that it is impossible for a couple to purchase an average 3 bed home in Dublin where the average price is 350k.
At Gallagher Quigley we believe the supply of second hand homes in Dublin will be weaker as a result of tougher mortgage criteria, weak supply can lead to home value spikes and wage increase demands which leads to more pressure on businesses. Intervention is required to provide some balance to this area.
Gallagher Quigley supports the recommendations by the IPAV and we echo Mark Keenan’s comments.
The recommendations are based on the feedback most Dublin estate agents receive from Clients and potential buyers.
Watch this space !