House prices set to rise as demand outstrips supply

HOUSE-HUNTERS are facing a price increase this year because demand is outstripping supply, while a shortage of zoned land is adding to the difficulties.

The warning came from the chairman of the Cork branch of the Construction Industry Federation (CIF), Joe O’Brien, who said that there were several factorsinvolved, but the mostimmediate one was the number of planning permissions refused in the region.

“The number of units granted planning permission in the 12-month period to September 2006 was down 20.6% in Cork on the corresponding period to 2005,” Mr O’Brien said.

“This fall-off will have a significant impact on the supply of houses in Cork over the next 12 to 18 months and may result in house price inflation,” Mr O’Brien said.

In Cork city and county the number of units granted planning dropped from 12,844 to 10,197, a fall of 2,647. The fall-off in planning permissions occurs at a time when demand has never been higher.

The most recent CSO projections predict a population of 5.2 million in Ireland by 2020, 800,000 more people than predicted less than four years ago in the National Spatial Strategy.

Mr O’Brien said that there was additional bad news for house-buyersbecause of the shortage of available zoned land in the greater Cork area, especially in the city’s suburbs.

“This was clearly established in a joint audit we (CIF) undertook with Cork County Council recently,” Mr O’Brien said.

The county council is trying to address this situation and asked landowners in the greater Cork area to submit proposals to have their land rezoned. It received a large number of submissions and is attempting to rezone large tracts of land.

However, Mr O’Brien said that there are delays in the planning process andappeals to An Bord Pleanála can take between nine and 12 months. Thus, even if the process is started straight away, none of the land earmarked is likely to have any houses completed on it for at least 15 months.

“We need to fast-track land rezoning and the planning process to solve this situation,” Mr O’Brien said.

He said Ireland’s population is growing at nearly five times the pace of the euro zone and the population in the key house-buyer age groups nearly 20 times as fast as in the rest of Europe.