There was a time when governments would take credit for rising house prices or regained “momentum” in the housing market like what we are currently seeing in the Irish market. Increasing property values were traditionally seen as reflective of a strong economy, and therefore trumpeted by incumbent administrations as evidence of their effective management of the economy. Not so any more, not with so many priced out of the market and forced to pay higher and higher rents.
The latest Irish figures show property prices nationally rose by 4.4 per cent on an annual basis in December, and that the headline rate of inflation has now increased for four consecutive months. Against a backdrop of 10 interest rate hikes, which many predicted would lead to a downturn in prices, the Irish market – in price terms at least – appears robust.
The Government will probably meet the latest property price data with a certain amount of circumspection. If more first-time buyers are availing of the various help-to-buy schemes as Minister for Housing Darragh O’Brien tells us, you would also have to presume that with prices rising at over 4 per cent many are simultaneously getting further and further from the ladder and the dream of home ownership.
While the increase in headline inflation reflects the natural momentum swing of markets across Europe, the Government’s help-to-buy schemes (there are currently three – the official Help to Buy scheme, the First Home Scheme and the Local Authority Home Loan initiative) must also be playing a part.
Stealth sackings: why do employers fire staff for minor misdemeanours?
How much of a threat is Donald Trump to the Irish economy?
MenoPal app offers proactive support to women going through menopause
Ezviz RE4 Plus review: Efficient budget robot cleaner but can suffer from wanderlust under the wrong conditions
The latest figures showed the price of new dwellings, which are mainly bought by first-time buyers, was over 9 per cent higher on an annual basis in the final quarter of last year, double the headline rate of inflation for the market as a whole.
Irish governments have been warned for two decades about the use of demand-side measures in a supply-constrained market and their potential to fuel inflation but they believe the only way of eliciting more supply is by helping buyers pay the higher prices.
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Find The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
