A "Celtic Tiger"-style bidding war over a house on sale in Rathmines, Dublin, where the price has almost doubled from the €685,000 asking price has been described by Minister for Housing Darragh O'Brien as "not sustainable".
He told the Dáil on Thursday he had watched the bidding on the four-bed semi-detached house.
Offers for the property had increased the price by more than €530,000, with the price now hitting more than €1.25 million.
“That is not sustainable and is not something I want to see, but we are in an unusual position where we are coming through post-Covid and are building up capacity in the sector,” Mr O’Brien said.
But he added that a full reopening of the housing market as Covid-19 restrictions eased would result in “a return to a more normal supply of properties for sale” which would “impact positively on the rate of price increases”.
“There are also some cost implications and cost increases in materials and labour that I hope will be temporary,” he said.
Mr O’Brien was responding during question time to Social Democrats housing spokesman Cian O’Callaghan, who warned that “these kind of bidding wars create huge anxiety and fear in prospective first-time buyers and haven’t been seen since the Celtic Tiger years”.
Mr O’Callaghan pointed to the CSO residential property price index report that said that prices have risen by an annual rate of 4.5 per cent in recent months and said the Tánaiste had defended this “on the basis that price levels have not yet surpassed the Celtic Tiger peak”.
He said the house in question was in poor condition and in need of significant renovation but still provoked a bidding war, in an area where renovated homes were renting for about €4,000 a month.
The Dublin Bay North TD pointed out that the average age of a couple buying a home has risen to 38, while the typical age of a single purchaser has risen to 42.
Mr O’Brien said that prices had to be viewed in the context of 2020, when the pandemic national lockdowns and restrictions on movement “impacted severely” on supply and construction.
There was a lot of pressure on the second-hand housing market, with a “far from ideal” situation where viewings were conducted online, he said.
He said the Housing for All plan to be published next month will set out a “whole of Government approach” to get to a housing system with “sustainable supply at a price people can afford with appropriate housing options, particularly for the most vulnerable”.
He said the Affordable Housing Bill, currently going through the Oireachtas and the "most comprehensive affordable housing legislation ever published by any government", will particularly "help those in the unaffordability trap".