It's likely to be a quiet bank holiday weekend on the house sale front because of a shortage of homes in the mid-price range, writes JACK FAGAN

THE JUNE bank holiday normally marks the halfway point in the main house selling season. For the first time in years the holiday break will be of little or no significance, not because of the scarcity of mortgages but rather of houses. The acute shortage of Dublin housing stock, particularly in the €600,000 to €800,000 middle price bracket, has left a clear gap in the market

The depth and range of the property slump, as well as the widespread concern about job security and pay cuts, has forced many families to think twice about trading up to larger homes. “Families don’t want to take on extra financial commitments right now,” says Michael Grehan of Sherry FitzGerald.

The same goes for the banks, who are now paying dearly for the extravagant lending frenzy of the property boom years. Borrowers wanting to move to bigger houses, now that the prices have been heavily discounted, are having to submit to a rigorous examination of their finances by the banks. Job security, outgoings and existing borrowings are being closely looked at and in many cases the banks are no longer taking account of bonuses as part of normal remuneration. Little wonder then that the mortgage companies are complaining that the stricter conditions being followed by the banks are squeezing “mortgage switchers” out of the market.

A large proportion of the middle-range homes making it on to the market are being sold on the instructions of executors of wills. These properties are being snapped up and, according to Keith Lowe of DNG, for the first time they are frequently making more than the quoted price as a result of competitive bidding. Lowe acknowledges that property prices are otherwise still falling but says the slippage is at its lowest rate in almost three years. He also points to evidence of over-correction in the starter homes market. Single-storey houses off areas such as Cork Street are frequently being sold for around €80,000. Buyers could get a mortgage at a cost of only €400 a month and rent the property at €900 a month. Lowe has witnessed the same anomaly in parts of the apartment market where these units can be rented at 50 to 60 per cent more than the cost of mortgage repayments on them. He is convinced the present shortage of housing stock will speed up the recovery in the market.

Sales resulting from marital break-ups, which normally account for a large number of house sales, have also been hampered by the changes in the property market. The collapse in property values has left many couples with no choice but to hold off on the sale of their main asset. Other options are increasingly being looked at.

Grehan has also noticed that more families are extending and refurbishing their homes rather than moving. Much of their surplus income, he says, is going to pay off mortgages on under-performing investment properties as well as holiday homes.

While the shortage of family homes in fashionable suburban areas may well speed up a recovery in prices in at least these locations, it is a different matter altogether in some of the outer suburbs, where there are still a great many new homes lying unsold. Developers are increasingly dropping prices to shift this stock and while this strategy is beginning to work, it is also pulling back the value of second-hand homes in the same areas. That there should be a scarcity of homes at all in Dublin is somewhat puzzling given the vast oversupply of completed apartments in the outer Dublin suburbs. No one can deny that the developers and the bankers carry much of the blame but for my money the planners were equally culpable. Instead of restricting high-density developments to the city centre and suburban villages with good transport services, they effectively gave carte blanche for them in all sorts of locations. Worst of all, they gave Liam Carroll’s Zoe Group permission to build the guts of 1,000 apartments in the centre of Tallaght. Talk about sowing the seeds for another Ballymun – an experiment that failed badly. Demolition must surely be the best option in this case.