Philip Slattery is a 35-year-old accountant who lives in the suburbs of Dublin and has been looking for a house for three years, first by himself, then by his partner and their three children.
The severe housing shortage in their area has triggered a surge in house prices, which are usually 20,000 Euros or 30,000 Euros higher than the asking price-given that Average sales price in Dublin Approximately 396,000 Euros.
“I think I have to win the lottery,” Slattery said of his chances of owning a house.
For decades, dysfunction has been a defining feature of the Irish real estate market, most notably during the boom-to-bust period from 2000 to 2010, as prices got out of control and fell sharply in the subsequent crash.
Now, this country is in another kind of crisis.
Ireland is expected to build only 21,000 houses and apartments this year. Because of tightening loan conditions and coronavirus-related delays, the supply is much lower than the more than 90,000 houses built each year at the peak of 2006.
The result is a shortage From single-bed apartments in the centre of Dublin to family homes in the suburbs and areas, various accommodations can last for several years. At the same time, before luck changed, Slattery lived with his parents and his partner, and the children lived with her children.
Dermot O’Leary, chief economist at stockbroker Goodbody, said that the current situation is far from the easy money era of the mid-2000s that heralded the 2008 financial crisis.
Today, mortgage ceilings keep buyers’ budgets “so low.” .. It excludes a large number of people who buy homes,” he said. For builders, access to credit and Ireland’s high construction costs relative to sales prices make it difficult for them to increase production to the 35,000 units required by the market each year.
In a commuter town near Dublin, the US investment fund Round Hill Capital did not help solve the housing shortage. The fund acquired 135 of the 170 homes for sale in a development project in April.this is The last straw For the wider public, the government, and many families, couples and individuals struggling to find suitable accommodation.
The ruling coalition took action to impose a 10% stamp duty on anyone who bought 10 or more houses within 12 months.
Ministry of Finance Say For investors who “reject the opportunity for first-time buyers to buy a house”, this will be a “serious inhibitory factor.”
Whether this is the best way to solve the problem is still an open question, and it is also a politically debated issue. “You caused a sensation in the media on a topic, and within two weeks you made a policy. This is not the way housing policies should work,” O’Leary said.
This problem is not unique to Ireland.In Germany, the shortage of supply and the sharp increase in rents have made housing one of the most controversial issues in Berlin, as recently emphasized Vonovia, Germany’s largest homeowner, merged with a competitor in a €18 billion merger.
To help make deals politically, these companies promised to sell some apartments to local authorities at no premium, promised to freeze certain rents, and build more apartments.
Meanwhile, the Irish real estate market is in a frenzy, said Andrea Whelan, Sherry FitzGerald’s Dublin real estate agent.
She said that in her 23 years in the industry, she “never had a stronger database of qualified buyers”, but the emotion in it was “a sense of anxiety… a sense of frustration.”
The by-election in the South Bay area of Dublin on July 8 provided politicians with additional incentives to weigh this issue.
Fine Gael, the third largest party in the parliament and the second largest party in the ruling coalition, is at the highest risk and may lose his seat in the vote.
Simon Harris, the Irish Minister of Education and the election director of the Fine Gael Party in the south of Dublin Bay, said it was “very important” for the government to take action on investment funds in response to the real estate market.
The largest opposition party in the Irish Parliament and the second-largest party, the left-wing Sinn Fein, also believes that the government should generally take more measures, including levying additional capital gains taxes on real estate investors and more social and economically affordable housing.
“If you really believe that the election is an opportunity to send a signal to the government… then let us make this election a referendum on our failed housing policy,” said Eoin Ó Broin, Sinn Fein’s election director for Dublin Bay South.
One question is whether the stamp duty investment fund that must be paid when buying large-scale houses is likely to be extended to apartments, which is the area where international institutional investors usually participate the most, accounting for nearly one-fifth of sales in 2018.
An executive of a large real estate investment company said, “The only people who build apartments are those supported by international capital.”
If this is the case, the prospect of further government action is a bad omen for investment funds and future apartment construction.
Jim O’Callaghan, who is in charge of the Dublin South Bay by-election for Fianna Fail, the largest political party in the Irish ruling coalition, said that extending taxation to apartment sales is what many people in the party want. “We may have to re-examine this issue,” he said.