Report points to stabilisation in housing market amid call for tax incentives to boost supply
Policymakers should consider introducing tax measures to encourage “empty nesters” to trade down, thus alleviating the current shortage of family homes in Dublin.
According to Philip O’Sullivan, chief economist with Investec, in the absence of any “meaningful new build activity”, tax incentives could be used to help boost supply which in turn could help moderate the current upswing in Dublin prices.
According to the IBF Housing Market Monitor Q3 2013, published today by the Irish Banking Federation (IBF), most of the indicators of housing market activity are trending upwards but the market overall remains at the stabilisation stage.
According to the survey, there has been a 29.7 per cent increase in the number of properties listed for sale; a 19.2 per cent increase in the number of housing market transactions; and a 14.7 per cent increase in the level of mortgage drawdowns, compared to the same period in the previous year.
While prices are on the rise, Mr O’Sullivan played down concerns about a property price bubble.
“The current double-digit rate of inflation in Dublin property prices has given rise to concern in some quarters that a bubble may be beginning to emerge in the capital. I view such talk as overdone for now,” he said, adding that based on the CSO’s Residential Property Price Index, this move has only resulted in the -57 per cent peak-to-trough fall in Dublin prices improving to a ‘peak-to-current level’ of -51 per cent and the low volume of transactions seen at the trough in the cycle may have exaggerated the extent of the fall.