Welcomed by younger buyers - Removal of mortgage cap

THE move by the Central Bank to remove the €220,000 cap on mortgage lending for first-time buyers who have a deposit of 10% will be welcomed by many younger people in particular who are saving to buy their first home.

The move is not a major departure from the current prudential rules imposed by the CB and in particular aims to address the difficulty experienced by first-time buyers in Dublin where house prices are way above the national average.

The move highlights two problems with the housing market in Ireland:

Firstly, it shows that we really have two housing markets — one in Dublin and the other in the rest of the country;

Secondly, it exposes the paucity of house building and the fact that, even in the midst of an economic recovery, conditions are still not right for contractors to resume building homes on anything like the scale needed.

The Society of Chartered Surveyors Ireland gave a broad welcome to the decision to ease deposit rules for first-time buyers but advised that more needs to be done on the supply side. That is a good assessment.

At one stage during the boom years, we in Ireland were building more houses per year than in the UK. That was not sustainable. Now, we are building far fewer homes than we need. That is equally unsustainable.