‘Housing market support must focus on supply’

The focus of government support for the housing market should be on helping increase the supply of units rather than artificially boosting demand among first-time buyers, according to Conall MacCoille of Davy Stockbrokers.

Mr MacCoille, speaking at the publication of the latest Irish Banking Federation’s Housing Market Monitor, said there were signs of recovery in the housing market, but the sector still faced many challenges.

The Housing Market Monitor, which covers the first three months of the year, found that there had been a 29.3% increase in the level of mortgage approvals and a 65.6% increase in the levels of drawdowns, albeit from low levels.

Moreover, there had been a 23.6% rise in the number of new dwellings completed and a 4.5% increase in the number of properties listed for sale, the report said.

There were a total of 8,300 house completions in 2013, which is well below trend demand of 20,000 to 25,000. Lack of housing supply is particularly acute in Dublin where demand is significantly above units coming on the market.

Mr MacCoille advised against schemes such as the Government’s proposal to offer an insurance scheme to help first-time buyers meet the cost of deposits for a mortgage. In future, the Central Bank must keep its policy anchored in affordability if another boom/bust cycle is to be avoided.

He said the Government should look at ways of releasing landbanks that could be used for residential purposes. Other reforms needed include looking at making development levies more affordable and a planning system overhaul.