Government urged to encourage older couples living alone to trade down

The Government has been called upon to introduce tax measures to encourage older couples whose offspring have left home, to trade down as a way of making more family-sized homes available.

“In the absence of any meaningful new build activity, in order to help moderate the current upswing in Dublin prices, policymakers should consider introducing tax measures to encourage “empty nesters” to trade down, thus alleviating the current shortage of family homes in the city,” Philip O’Sullivan, chief economist with Investec Ireland said.

Speaking at yesterday’s launch of a new housing market report by the Irish Banking Federation, Mr O’Sullivan said the number of house completions for this year is likely to roughly equal the 8,488 builds from 2012 — suggesting it is too early to state a full recovery is under way in the market.

The new data shows a mixed performance for the market, during the third quarter of the year. The level of transactions jumped by over 19%, on the same period last year, to just over 7,560 and mortgage drawdown levels were up by nearly 15% year-on-year.

Houses listed for sale numbered just under 10,600, representing year-on-year growth of 29.7%; while building commencements rose by nearly 24% to 1,188. However, the year-to-date level for commencements is only up by 5% to 3,237. Furthermore, build completions were down by almost 6% year-on-year in the third quarter, at 1,982 and were down by 1% on a quarter-by-quarter basis.

According to Mr O’Sullivan this suggests 2013’s full-year completion outturn should equal, at best, last year’s levels — still only about a quarter of the average annual completions since 1978. He also suggests “no meaningful change” in new build activity is likely over the coming quarters, based on recent data.

“At a headline level, muted new supply, a divergence in the price performance between Dublin and other areas, poor liquidity and unsustainably low mortgage volumes continue to be reflected in the latest statistics emanating from the sector.”

“In saying all of that, there are continued signs of a gradual recovery in some local markets, while in other areas the pace of decline appears to be moderating, producing an overall narrative of stabilisation,” he added.

He dismissed talk of a “bubble” emerging in the Dublin property market, but said that any sustained steep upward move in prices in the capital would be “unwelcome”.