Since the onset of the financial crisis, the housing market has struggled to overcome weak demand, poor supply and tight lending restrictions on borrowers. Close to 100,000 housing units were built annually at the peak of the property boom but fewer than 10,000 have been completed in the downturn.
A national survey by GeoDirectory shows just 4,375 units under construction in June. Latest figures from the Banking and Payments Federation Ireland reveal a sharp increase in both the number and value of mortgages drawn down by customers on a quarterly and annual basis. Almost 7,000 mortgages – worth €1.29 billion – were drawn down in the latest quarter, up 11 per cent on an annual basis, and a quarter higher on the January-March period. Recovery in the housing market may have started but from a low base and at a slow pace.
The market has been constrained by tight lending conditions, which have been rightly set by the Central Bank, and by a shortage of suitable properties in urban areas. Cash buyers, it is estimated, accounted for almost half the transactions in the second quarter. GeoDirectory, in its research, identifies the emergence of a three-tier property market: with Dublin in the first tier, followed by commuter belt counties and other cities, with rural counties lagging in the third tier. The average house price in Dublin (€380,237) was almost two thirds higher than the national average.
However, the turnover in residential housing stock remains weak with about half the normal level of transactions occurring. Building activity is highest in Dublin which accounts for one quarter of all national construction. But for some counties in the third-tier category (notably Longford, Leitrim and Roscommon) their problems are interlinked. Little new construction is under way as the counties have not yet fully benefited from the national economic recovery; while the existing high level of vacant housing stock ( a legacy of the property bust) will continue to depress house prices there. A return to what might be deemed a "normal" property market is some way off.