When a very average 4 bed semi-detached house in a very average Dublin suburb has an asking price of half a million euros, it’s obvious something is very wrong.
There’s been a lot of talk of a mini-bubble in the Dublin housing market and suddenly we’re obsessed with property like it’s 2006 all over again.
A number of influencing factors have come together to create a perfect storm in the Dublin property market.
- Lack of supply driven by many people’s reluctance or inability to move (due to negative equity) coupled with a scarcity of new family housing being built in Dublin.
- Lack of credit as banks impose increasingly stringent conditions for mortgage approval and in many instances the loans they do approve fall short of what many people need to successfully purchase in a rapidly inflating market.
- Increasing demand as many who bought apartments during the boom, or who held off on buying waiting for the market to cool down, seek to trade up to meet the needs of their growing families.
It’s becoming evident that an entire generation will never be in a position to purchase an average sized family home in a decent area in Dublin.
If the rental market was in better shape perhaps we would see a change in consumer behaviour, where, similar to continental Europe, more people are content to rent property long-term. However the prohibitive cost of renting a family home and the lack of availability of suitable properties make this an unlikely outcome.
An opinion piece in Sunday’s Independent claims that the problems facing the current generation are a legacy of the greed and profligacy of the previous one who squandered our futures.
This is entirely fallacious. Our parents’ generation was, in the main, extremely frugal and circumspect when it came to taking on debt.
It is true that £15,000 in the Seventies, which was the equivalent of an average annual middle class income, would get you a 4 bed semi in a good neighbourhood, whereas an average salary of €35k – €40k today wouldn’t get you a mobile home in Brittas Bay.
However blaming our adversity on the previous generation risks creating a dangerous age divide in society and will lead to jealousy and resentment.
For all the recent media coverage, there aren’t many solutions being posited.
Banks moving to repossess buy-to-let properties in arrears may increase supply, but it’s unlikely this will lower prices to the extent that they become affordable to the average buyer.
Despite public perceptions that NAMA is sitting pretty on a glut of 4 bed semis in South Dublin, that is almost certainly not the case.
Options for those being squeezed out of the Dublin market include the prospect of long commutes from satellite towns, the uncertainty of renting or the phenomenon that is becoming increasingly prevalent – moving back to live with Mum and Dad!