House prices will hold up, but problems remain to be addressed – IPAV
There is increased activity in the housing market and overall, prices are holding steady, says Pat Davitt (above), chief executive of the IPAV (Institute of Professional Auctioneers and Valuers).
Commenting on today’s CSO Residential Property Price Index for July, the IPAV said that while there was a drop of 40.7pc in the number of dwelling purchases in July compared with July 2019, and a small pick-up of 12.9pc over June 2020, market intelligence would indicate that the situation has improved since then, especially given that there is a 44-day submission deadline on Revenue stamp duty returns on which CSO figures are based.
Mr Davitt said: “Activity has certainly ramped up as the industry has adapted to the new normal of transacting properties amid a horrendous pandemic.
“There are major issues, however, with a lack of supply of properties, affordability and with lenders acting in a severe risk-averse way.”
He said new homes, even in rural Ireland, priced between €250,000 and €300,000 are too expensive for young people on an average wage of €40,000 or €50,000.
“There are many areas throughout the country where second-hand properties are being sold for less than what it would cost to construct them,” he said. The IPAV has this week called for the Help-To-Buy (HTB) scheme to be extended to include second-hand homes.
The scheme currently applies to first-time buyers of newly-built homes to buy a new house or apartment.
It also applies to one-off self-build homes.
It provides a refund of income tax and Deposit Interest Retention Tax (DIRT) paid in over the previous four tax years.
“There is a good supply of properties for prices much lower than that of new homes, typically at prices of between €170,000 and €250,000, especially in rural areas,” Mr Davitt said.
He said there could be up to 100,000 properties lying idle, including former commercial premises, that could make attractive homes.
While there are good incentives for renovation, young people first need to buy the properties. “And the 7,5pc Stamp Duty is a real impediment. It needs to be reduced to the residential rate of 1pc.”
“Such an initiative would have the positive consequence of freeing up properties in the cities for rent or for sale,” Mr Davitt said.
He also said the Housing Commission promised in the Programme for Government needs to bring all elements of housing policy together. “It also needs to be inclusive of all industry stakeholders. Policy over recent years has been far too subject to isolated interventions with severe unintended consequences.
“The commission could present the last real opportunity to get things right,” he said.