Government offers 'confusion rather than clarity' on housing targets as prices continue to surge, report says

House prices are up 9.2% in Cork, and 11.2% in Waterford.

House prices have surged to the highest level in eight years, as Government policy offers “confusion rather than clarity” on how Ireland can build the homes it needs, a damning new report has said.

The latest Daft.ie house price report found the typical listed price for a home in the first three months of this year was €346,048, more than 11% higher than the same period last year, and 35% higher than at the start of the pandemic.

The surging prices were revealed as Central Bank chief Gabriel Makhlouf cautioned against Government plans to ease lending rules to allow property developers borrow more money to boost the building of apartments.

Mr Makhlouf said his "very strong advice" would be for housing minister James Browne and his department to take stock of existing interventions and ensure they are mutually supportive before introducing another.

With the Government under fire for building just over 30,000 homes last year — despite ministers claiming before the general election the figure would be closer to 40,000 — and the Central Bank forecasting house building targets would be missed over the next three years, the latest house price report again shows the impact of constrained supply on the market.

It found the rate of “market heat” — homes being sold above asking price — is at its highest in Dublin for 15 years, with homes typically going for 7.9% above asking prices, as supply remains scarce and competition is fierce.

Trinity College Dublin associate professor in economics Ronan Lyons, who authored the report, raised concerns about how Government policies had impacted the market.

“The entire housing system seems reliant on Government funding and subsidies, an unfortunate circumstance at the best of times but of greater concern given wider economic uncertainties,” he said.

Changes in the wider regulatory set-up seems to have delivered confusion, rather than clarity, about how the country will build the homes it needs. 

According to the Daft report, the surge in inflation is being driven by Dublin (up 12.2%) and the rest of Leinster, along with cites like Galway ( up 13.2%) and Limerick (up 13.8%), with lower inflation rates in Cork (up 9.2%) and Waterford (up 11.2%).

The number of second-hand homes available to buy countrywide on March 1 stood at less than 9,300, which is 17% lower than the same time last year, and the lowest figure recorded since January 2007.

Mr Makhlouf, meanwhile, insisted the Government should prioritise investing in land available for development, saying infrastructure is where he would put a particular focus to ensure the landbanks are available for development.

"We published a report before Christmas, in October or September, specifically on housing, where we made clear — and I am happy to repeat it now — that the number one issue on housing is not finance. The number one issue on housing is planning," Mr Makhlouf said.

It is absolutely planning. This is not a unique situation in Ireland but planning is the problem.

However, Mr Browne disagreed and said the Government's job was to look at every measure possible to deliver housing, including looking at the finance required.

Large-scale apartment building is needed in Dublin city centre and it is here Mr Browne said "finance is simply broken".

If it was working currently, then the apartments that are needed to meet demand would be being built, the housing minister said.

"We need apartments and we need them in Dublin city centre," he added, saying it was a financing rather than a planning issue.

Mr Maklouf and Mr Browne are scheduled to meet in the coming weeks.