Acceleration in house prices can be expected to continue until supply ramps up on its current “anaemic level”, the Institute of Professional Auctioneers & Valuers (IPAV ) has warned.
Pat Davitt, IPAV’s chief executive, said: “On the face of it, the new €750 million Home Building Finance Ireland (HBFI ) scheme looked very positive. We were told the agency would provide badly needed cheap loans to builders. However, it has since emerged that these loans could be at interest rates of as high as eight per cent, at a time when money can be borrowed by institutions for less than a third of that. In addition, it has also been indicated that these loans may not begin to flow until well into 2018.
“If this is going to be the shape of the new initiative, then we can be guaranteed that it will have minimal impact on the supply issue any time soon and may only help those who are already in a position to provide supply.”
Mr Davitt said to aid movement in the housing market the Central Bank mortgage lending rules should be eased somewhat for non-first-time buyers and the Help-to-Buy Scheme should be extended to such people.
“However, unless the supply of new homes ramps up more quickly there will be no appetite in Government or within the Central Bank to make these appropriate changes, fearing that any such action would accelerate prices,” he commented. “And when supply remains so appalling poor then that is exactly what will happen, unfortunately.”
Mr Davitt said the issue captures the “interconnectedness of the housing market”, where the lack of supply is adversely impacting virtually all home aspirations, from those who are homeless to the inability of many young people to get on the property ladder. This is also preventing the development of a sustainable property market, he said.
Early last week and prior to the Budget, the IPAV cautioned that the HBFI scheme should not be “scuppered with red tape in how it operates”.