With the Government still convinced increases in new house prices are slowing down, it seems doubtful it will be taking much notice of any of the pre-budget submissions from groups involved in the property industry. While most people now accept the Bacon measures are not working, the Government is looking the other way, hoping to get the housing crisis off the agenda long before the next general election campaign gets under way.
According to Alan Cooke, chief executive of the Irish Auctioneers and Valuers Institute, the levelling off of house prices will be another reason for investors to stay away from the property market. At the moment, he estimates investors are getting a return of only 4 per cent. In recent years, this has been compensated for by the high capital appreciation, but once that slows down, the overall return to the investor will be unattractive unless there is a dramatic increase in rents. Mr Cooke says anyone familiar with the home rental market will know tenants, and not investors, will have to pay the price for a curtailed supply.
This is certainly one aspect of the IAVI's submission that the Government should take on board.
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