The latest house price report showing a surge in property prices in areas outside of Dublin but stagnant in the capital makes for interesting reporting.
What the report does not address is how dysfunctional the Dublin property market is and how unaffordable it is becoming.
Beginning in 2011, property investors were given a Capital Acquisition Tax (CAT) boost if they purchased by the end of 2014 and then held the property for seven years. The measure was an overnight success; attracting property investors en-masse and boosting property prices, especially in the capital.
Then, just as the tax boon for investors ended in 2014, new, highly restrictive lending rules were introduced making it much more difficult for would-be first time buyers to buy a home.
Investors 1, first time buyers 0
Today, across the developed world, credit is a key component of how we finance our everyday needs, including purchasing a car, paying for college and buying a home.
But mortgage lending in Ireland has become highly restrictive and highly selective. Despite the upsurge in general advertising for mortgages, mortgage lending levels are only slightly ahead of the levels of 40 years earlier. For example, for all of 2014, just over 20,000 mortgages were drawn down. Compare this to 1974 and 1975 where some 18,000 and 21,000 mortgages were drawn respectively.
A plea by the global payments giant, PayPal last just last week should serve as warning of how dysfunctional the property market in Ireland is becoming; it sent a request to current staff asking for volunteers to make rooms available to new hires.
And it not just PayPal. A lack of housing opportunities is increasingly being cited as a primary factor for emigrants against returning back to Ireland.
Cities across the western world are now focusing more than ever on housing affordability. In New York, London, housing affordability is driving new policies to ensure that teachers, nurses and fire-fighters that are needed to ensure those cities grow are able to afford living there. It’s high time that a big push is initiated here in Ireland before it is again too late! In the end, it’s the cost of paying for a home that matters, whether one buys or rents is secondary and the cost of housing here is still surging uncontrollably!