Article: Chairman of the housing agency, claims surge in property prices is over

The_Conductor

http://www.independent.ie/irish-news/news/surge-in-property-prices-is-at-an-end-30567380.html

The surge in property prices is set to "rapidly level off", according to an expert on housing appointed to advise the Government.

Conor Skehan, chairman of the Housing Agency, has also dismissed claims that there is a housing "crisis" but warns: "Housing in Ireland is about to change dramatically".

Dr Skehan has a record of making early predictions that have proven to be correct.

Three years ago, he correctly predicted a recovery in property would occur this year, mostly on the east coast, with "the speed and vigour of a ping pong ball released under water".

In the Sunday Independent today, he says concerns about recent house price increases are "another false alarm often misconstrued as a crisis".

He says price increases have a "natural braking mechanism" that is already evident. "We were experiencing a shortage of houses for sale - not a shortage of houses," he said.

Dr Skehan's latest prediction comes as the Government plans to make housing a centrepiece in the Budget next month.

The Government is frantically trying to fast-track the construction of 30,000 new homes in Dublin, but is struggling to find solvent developers to build.

The Coalition is coming under huge pressure to free up land for development as house prices in Dublin and other cities continue to rise.

There are 1,000 hectares of zoned land on which it plans to build up to 30,000 units across Dublin's four local authority areas.

The Sunday Independent has learned that a high-level working group led by Finance Minister Michael Noonan is currently looking at the lack of credit available to developers.

However, it has concluded that many bust developers are legally unable to take up the financing.

"The money is there, the banks have made it available but because of legacy insolvency issues, many are unable to take up the financing," a senior government source said.

Public Accounts Committee Chairman John McGuinness has said that he is to invite Nama developers to tell the PAC about their experiences working with Nama.And if they are nervous about talking in public, Mr McGuinness says the committee will hear testimony in private, as in the case of Garda Maurice McCabe, the Garda whistleblower.

However, Dr Skehan has warned that the old construction model is broken.

"When bankers and developers both learn to adopt new ways to attract and sustain funding, then much of the present 'crisis' will rapidly evaporate," he said.

He added: "Old types of builder/developers will become a dying breed, amateur buy-to-let landlords. . . will find it increasingly difficult to compete" against "smart professional developers with new funding models" and "highly professional landlords".

Labour leader Joan Burton, meanwhile, has told the Sunday Independent the Coalition will announce a series of initiatives in Budget week.

Ms Burton said: ''Creating homes for young couples is an issue of absolute urgency; it is a critical feature of the agreement between myself and the Taoiseach."

Ms Burton also said: ''In Budget week there will be an announcement of capital projects which will be going into the billions over a number of years.''

The Tanaiste said: ''Our priority is to ensure that working and home ownership will be affordable for working and middle-income families.''

However, Dr Skehan warns that the Government needs to avoid being "stampeded into old destructive patterns" of new buildings to stimulate the economy or accommodate more people.

He said: "The real problems are affordability driven by greed and availability driven by impracticality."

He added: "We need to shout from the rooftops about the need to reduce costs of building - land, materials and labour."

Yesterday, the Construction Industry Federation Director General, Tom Parlon, said: "We need a kickstart, like the Government's 9pc VAT rate for the service industry. We are looking for something to prime the pump."

But Environment Minister Alan Kelly told the Sunday Independent: "If the last round of building was developer-led, Labour will be making sure this round is people-led; we have seen the damage greed did in the past and nobody wants to go back there."

The Housing Agency has advised the Government that a minimum of 79,660 residential units are required in urban areas to support the country's population over the next five years.

The agency forecasts that 47pc of the total supply is required in the Dublin region, with 5,663 housing units needed in 2014, rising to 8,970 in 2018.

Outside of Dublin, the agency says Cork city and suburbs will see a yearly demand rising to 1,469 units by 2018.

The agency also says Galway and Limerick will experience a shortfall in housing needs in 2015 but will require a total of 2,316 and 2,635 units respectively over the subsequent years to 2018.

mr_seer

So the head of the Housing Agency is claiming that we are in for a soft landing? He is clearly trying to justify the government policy that has been driven by his advice.

The Dagda

The "bubble" is based on a market of approx 4,000 units per annum.

The "bubble" only exists in the media's porn drawer.

mr_seer

It is a bit like AIB shares, a massively illiquid market. AIB has a free float market cap of EUR 56 billion. If you squeeze supply of an asset to a trickle, price always increases. Once there is a supply response, there is a price correction. The current house price bubble in SCD will end badly

jay0109

Big statement from the 'Chairman'.....to who's beckoning is he running to the media?
Are the Govt worried about recent massive price rises and are trying to allay the fears of those with a brain out there, in order to prolong the spike

MouseTail

Interesting, thanks for posting. This guy speaks a lot of sense.

Zamboni

I'm still getting over that this was front page in the Sindo :eek:

dpe

The Dagda wrote: »

The "bubble" is based on a market of approx 4,000 units per annum.

The "bubble" only exists in the media's porn drawer.

Unless of course you're actually looking for a house right now. We started looking in Dublin around April. A house that would have gone for 550 then is typically hovering around 700 now. Yes its a lack of supply as much as anything, but its still a real price expansion. Worst indication is new build prices that suddenly jump a 100 grand even after paying a deposit (just happened to my brother-in-law, and I've seen it a couple of times on Daft)

uli84

Talking about new built houses- Parkedge clongriffin - 3 bed 205k phase released in Jan 2013, 3 bed- 295k now. Yes, i do regret not buying then but i was like-clongriffin-who would like to live there hehe not so choosy anymore but still very hard to find anything decent around 200k mark

dpe

uli84 wrote: »

Talking about new built houses- Parkedge clongriffin - 3 bed 205k phase released in Jan 2013, 3 bed- 295k now. Yes, i do regret not buying then but i was like-clongriffin-who would like to live there hehe not so choosy anymore but still very hard to find anything decent around 200k mark

Funnily enough Clongriffin is still a bit sluggish compared to the areas around it (Sutton and Portmarnock have gone nuts) but I think that's mainly due to the schools being less attractive; the whole bubble is being driven by people with young kids looking for family homes; every Saturday you can see roving packs of them going to viewings; most with a 4-5 year old and a baby.

Victor

As I said elsewhere.

Victor wrote: »

Prices are likely to rise from now to November. From November to February, prices will quite possible drop several percent as the CGT tax break expires.

http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_gains_tax.html

gaius c

Zamboni wrote: »

I'm still getting over that this was front page in the Sindo :eek:

Lots of spin going on. Much of it is to try and get those with money (and houses) to buy more property. Articles like this are trying to convince FTB's to take off their clothes and jump into the scalding hot water too.