The affordability of homes in Dublin is already “stretched” and the Central Bank mortgage controls will likely hold prices in check, according to a major study of the housing market by Davy Stockbrokers.
Buying an average family home in Dublin costs 6.2 times the average income earned in the region, the broker said.
That compares with only 3.9 times average income required to buy a family home in the south-west.
Central Bank mortgage controls will help to keep house price inflation at 5% this year, it predicts.
Building costs for new homes are falling but the housing market remains dysfunctional in bringing on new supply, it said.
Its survey of builders found that because of high costs, building new homes remains unviable in many areas though the outlook has improved in Dublin.
The survey results “suggest that build costs are not hugely out of line with house prices — about 41% of Dublin transactions are above-estimated build costs — but more could be done to reduce costs to make construction universally viable,” the broker said.
The new housing crisis has become a major thorn in sustaining economic recovery because demand for new homes across many urban areas far outstrips supply.
Consequently, as CSO figures show, the costs of private rents have soared.
Many of Davy’s recommendations for helping to solve the housing crisis and boosting the supply of homes involve the Government pumping in public money.
The broker also suggests the possibility of providing incentives for the construction sector.
The broker said the Government, which has already revised building standards for new apartments, could look again at other building standards, which it says add up to €30,000 to the construction costs of each housing unit.
It also wants local authorities to ramp up investment to bring serviced land on stream and to tackle delays in the planning process and more variety in the types of housing units being built.
The broker said the construction workforce of 126,000 is still less than half the 270,000 employed at the peak of the boom.
Real Estate - Our buy thesis is built on dysfunctional space markets and demand side fundamentals - https://t.co/kApwAVbDKF— Davy Research (@DavyResearch) April 20, 2016
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