Philip Slattery, a 35-year-old accountant living in suburban Dublin, has been looking for a home for three years, first alone, then with his partner and three children in their family.
The severe housing shortage in their area has driven up property prices, with property prices often over €20,000 or €30,000 above asking price – a significant premium considering that Dublin average sales price About 396,000 euros.
“I’m thinking I’m going to have to win Lotto,” Slattery said of his chances of owning a home.
Dysfunction has been the hallmark of Ireland’s property market for decades, most dramatically in the boom-to-bust period of 2000-2010, as prices spiraled out of control and fell sharply in the crash that followed.
Now the country is in the midst of a crisis of a different kind.
Ireland expects to build just 21,000 homes and apartments this year, as tighter lending terms, combined with coronavirus-related delays, have pushed supply well below the 90,000 homes a year built at the peak of 2006.
The result is a Shortage Accommodation that can last for years across everything from one bedroom apartments in Dublin city center to family homes in suburban areas. Meanwhile, until their luck changes, Slattery lives with his parents and partner and the children live with her husband.
The current situation is a far cry from the easy money days of the mid-2000s that heralded the 2008 financial crisis, said Dermot O’Leary, chief economist at Goodbody, a stockbroker.
Today, mortgage ceilings leave buyers with very low budgets. . . It excludes a large group of people from buying a home.” As for the builders, the access to credit and the high cost of building in Ireland compared to selling prices make it difficult for them to increase production to the 35,000 units per year the market needs.
In commuter towns near Dublin, US investment fund Round Hill Capital has not helped solve the housing shortage, which in April lapsed into 135 of the 170 homes for sale in one project. It was The straw that broke the back For the wider public, the government and many families, couples and individuals struggle to find suitable homes.
Pushing it to take action, the ruling coalition responded by charging a 10 percent stamp duty on anyone who buys 10 or more homes in a 12-month period.
Ministry of Finance He said This would provide a “huge incentive” for investors who “deprive first-time buyers of the opportunity to buy a home.”
Whether this is the best approach to the problem remains an open question and a hotly debated political issue. “There was a bit of a media hype on a certain topic, within two weeks I had drafted a policy. That’s not how housing policy should work,” O’Leary said.
The problem is not unique to Ireland. In Germany, a dearth of supply and a sharp rise in rents have turned housing into one of the most controversial issues in Berlin, as it was recently highlighted when Phonovia, Germany’s largest residential owner, along with a competitor in a €18 billion merger.
To help seal the deal politically, the companies committed to selling some apartments to local authorities without a premium, committing to freezing certain rents, and building additional apartments.
Meanwhile, Andrea Whelan, Dublin real estate agent for Sherry Fitzgerald, said the Irish housing market is going through a frenzy.
She said that she had “never had a stronger database of qualified and willing buyers” in her 23 years in the field, but that the mood among them was “a sense of anxiety . . . of frustration.”
The Dublin by-election in the Bay South on 8 July gives politicians an extra incentive to sway the issue.
The biggest risks are for Fine Gael, the third-largest party in Parliament and the second-largest in the ruling coalition, which could lose its voting seat.
Simon Harris, Ireland’s education minister and election director for Fine Gael in Dublin by South, said it was “really important” that the government took action on investment funds to deal with the housing market.
Meanwhile, Leftwing Sinn Féin, the largest opposition party and second largest in Ireland’s parliament, argues that the government in general should do much more, including additional capital gains taxes for property investors and more social and affordable housing.
If you really think that elections are an opportunity to send a signal to the government. . . Then let’s make this election a referendum on our failed housing policy,” said Eoin Ó Broin, Sinn Féin election director for Dublin Bay South.
One question is whether stamp duty mutual funds should now pay on wholesale purchases of homes could be extended to apartments, the sector in which international institutional investors typically participate, and which accounted for nearly a fifth of sales in 2018.
“The only people who build apartments are people backed by international capital,” according to a senior executive at a large real estate investment firm.
If this is the case, the prospect of further government action is an ominous omen for both investment funds and apartment building in the future.
Jim O’Callaghan, who runs the Dublin South Bay by-election campaign for Fianna Fail, the largest party in Ireland’s ruling coalition, said that expanding the tax to include apartment sales was what many party members wanted. “We may have to reconsider the case,” he said.