No, it’s not different this time - House price inflation highest in EU

IRISH house prices are climbing faster than any elsewhere in the European Union so it can only be a matter of time before someone who should know a lot better suggests that we should not fret “because this time it’s different”.

Even if this surge is provoked by a huge shortage of accommodation to buy, to rent or to satisfy social housing needs the trend rings so many of the alarm bells we disastrously ignored a decade ago that it would be reckelss not to sit up and take notice.

A recovering economy — also the fastest growing in Europe we are assured — falling unemployment figures and some of the world’s highest prices for farm land all feed into what can only be described as an increasingly fraught situation. What can be done to avert another soft-landing-gone-wrong is another matter entirely.

Eurostat, the European Union’s official statistics body, published data yesterday that showed our house prices were 16.3% higher in the last quarter of 2014 than in the same three-month period a year earlier and that the rate at which Irish house prices increased was by far the fastest in the EU. Malta, Sweden, Estonia and the UK saw the highest rates of house price infaltion — each recorded double-digit increases. These figures are driven by what might be called, in the Irish context at least, a perfect storm in social and housing terms.

Prospective developers argue that properly serviced land with the necessary planning designation is in short supply. They also suggest that the kind of credit needed to go beyond the official figures of 11,016 homes built in 2014 is very difficult to secure. The Society of Chartered Surveyors Ireland (SCSI) have challenged that 11,016 figure arguing it is overestimated by 20%.

Those realities are set against a background where a series of governments shamefully washed their hands of a basic social responsibility and trusted the market to meet social housing needs. That neglect has exposed political naivety — or apathy — and the market’s indifference to human need. Emergency measures are in place to try to bridge this gap but it is time to devise a mechanism, some sort of ratio based on population and housing stock, that obliges us to build a certain number of housing units each year.

The failure to properly regulate the rental market to protect consumers and property owners has contributed to this dreadful situation as well. Compared to other European countries our laws offer little enough comfort to tenants who face rent increases far beyond the rate of inflation on an all too regular basis. Once again our most vulnerable citizens seem to pay an inordinate price because we afford property rights such a powerful place in our affairs.

House prices increased by over 16% in the last quarter of last year. The number of prospective house buyers whose incomes increased by a similar margin would all fit in a neat, semi-detached, three-bedroomed house.

No, it’s not different this time and a solution to this dangerous, recovery-threatening spiral is urgently needed.

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