The Government has gone in deep into the housing market. And it is having an impact. A host of data published this week tells the story. First-time buyer activity is back at Celtic Tiger levels, boosted by the various State schemes on offer and easier lending rules. Along with new supports for builders and developers, this demand is also having an impact on housing supply, where the total of newly completed homes could now exceed 32,000 this year.
The string of Government supports is affecting prices too and appears to be increasing the divergence between different parts of the fragmented housing market. One comparison in the latest CSO house price data is striking. New house prices this year are running 11 per cent ahead of 2022 levels, while second-hand prices are pretty much unchanged, up just 0.6 per cent. Pulled down by weakness at the higher end of the market, Dublin prices are 2 per cent down on the year.
It seems reasonable to conclude that this jump in new home prices is because most of the State supports — notably the Help-to-Buy scheme and the new shared equity scheme — are restricted to those buying newly built properties. And that elsewhere the market is struggling under the impact of higher interest rates, the cost-of-living crisis and affordability challenges.
Apartment completions in particular are rising fast and John McCartney of BNP Paribas — whose optimism on housing supply has proved justified — says that total housing completions could rise to 35,000 next year on current trends
The new homes market remains in its own bubble. As well as supports for demand, a string of new schemes to promote housing supply are also rolling out. So for developers supply is being part-underwritten and demand for houses is being supported. Many developers had warned that higher