Housing supply

Home supply key to controlling price growth and boosting affordability, banking group says – The Irish Times

Housing supply must “continue to grow” to moderate current price rises and improve affordability, the Banking and Payments Federation Ireland (BPFI) has said.

In its latest assessment of the Republic’s housing market, the banking lobby group said the main driver behind the significant rise in average residential property prices – which are currently rising at an annual rate of 14% – was the lack of supply versus loan growth.

However, he welcomed the recent recovery in housing production. There were 7,654 housing completions in the second quarter, bringing the total number of completions to 13,316 units in the first half of 2022.

“While the construction sector has experienced significant challenges in recent years due to the impact of the pandemic, labor shortages and inflationary pressures, supply in the residential construction sector s is significantly improved in 2022,” said BPFI chief executive Brian Hayes.

“The latest data from the Central Statistics Office (CSO) shows that the level of housing production in the second quarter of 2022 is almost 48% higher than the number of completions in the first half of 2021 and 46% higher than the total number of completions during the same period in 2019, before the pandemic, he said.

“If the sector continues to grow at a similar rate to the second half of 2021, the expected increase in supply levels over the next two years should help meet the demand we are seeing due to the strong levels of supply. employment and increases in income and the Irish banking sector has the capacity to provide more sustainable mortgages,” he said.

“However, taking all factors into account, it is essential that housing supply continues to increase in order to moderate the rise in house prices and improve affordability in the market,” he concluded. .

In its report, the BPFI also noted that recent employment and income trends have supported healthy demand reflected in mortgage activity.

The economic fundamentals of the economy, such as employment and average incomes, are the main factors supporting the strong demand for mortgages at the moment, he said.

Recent figures from the CSO show employment hit a record high of nearly 2.6 million in the second quarter of 2022, with an average weekly wage of around €872, some 21% or €151 higher than five years earlier. These factors supported mortgage activity.

Figures from the BPFI showed that for the first half of 2022, mortgage drawdown values ​​increased by around 37% from levels seen in the first half of 2019, before the pandemic, while the volume of activity increased. increased by about 16% over the same period.