While the Government will have been content with aspects of the latest results from the Irish Times/Ipsos opinion poll, some of the findings released today should give it pause for thought. While it is clear that voters are giving the Coalition some credit for the budget measures to support households as energy prices soar, they remain unconvinced that enough progress is being made on housing. The “system” seems to be able to scramble to deal with a crisis, but longer-term planning and execution remains an issue.
The Government has made some good decisions in its Housing for All programme. But delivery remains behind what is needed and big questions remain in areas like planning – the subject of a review by the Attorney General – and the rising cost of building.
Now, to add a further challenge, higher interest rates threaten to hit demand for housing by making it more expensive and difficult to get a mortgage. The change in the Central Bank lending rules will act in the other direction, improving demand. But the scale of the interest rate increases from the ECB<EN>are striking, with another 0.75 point rise announced yesterday and a further increase planned for December.
As well as hitting housing demand, higher interest rates also affect supply by offering increased options for those who have been funding much of Irish housing, particularly international investors. If they can now get a decent, safe, interest rate return from US<EN>government bonds, for example, the bar for investing in housing – here or elsewhere – gets higher.
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Some 28 per cent of people in the latest poll said they are directly affected by the housing crisis. But many not affected directly see family and friends who are – and just 31 per cent believe that the Government is “making progress” on the issue, while 61 per cent feel it is not.
The Government deserves credit for maintaining a stable overall economic picture, but its execution on longer term issues like housing <NO1>may yet be its downfall<NO>leaves it vulnerable.