The recent growth in house prices may be starting to taper off, with the latest official figures showing it at the lowest level in more than 2½ years. The Government will point to success in stoking supply. The Central Bank will claim some credit for sticking to its guns on lending limits. And the Brexit blunderbuss that has hit every facet of Irish life has also undoubtedly played its part, tempering the public’s appetite to take out long-term loans in uncertain times.
After a post-crash lull, residential construction has picked up again. The Central Statistics Office (CSO) expects a total of 18,500 new dwellings to have been completed last year, rising to 23,000 in 2019.
Ireland remains one of the fastest-growing economies in the EU over the past four years, so an upswing in house prices is perhaps to be expected. And most middle-aged buyers can recall a time when double-digit price rises were something to celebrate. It was regarded as an electoral success story if you were overseeing such growth.
Recession and a new generation of first-time buyers have forced a U-turn: rising house prices are regarded as a serious negative for young buyers – and voters.
So a slowdown in the rate of price growth is good news these days. Yet there are clearly risks. Institutional investors, both local and foreign, are purchasing sizeable chunks of the residential market. If their returns start to weaken, will they stick around? If they offload their portfolios, it could pose serious problems for the market.
For buyers the hope is always that property prices rise only in line with inflation, but if there is a risk of oversupply – a word we never thought we’d return to so quickly after the recovery – the impact will be daunting.Fundamentally, the fact that property prices remain such a topic of everyday conversation underlines Ireland’s unhealthy relationship with property. So long as we put such store in the rising value of our houses, politicians will struggle to manage or influence the supply side to best effect.