You Have Nothing To Worry About

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Dr John McCartney, Director of Research at Savills Ireland

Honestly.

Supply is catching up with demand.

Look into the eyes not around the eyes.

Savills’ Dr John McCartney writes (via The Irish Times):

Opposition politicians of all creeds have made housing their main point of attack. Meanwhile, private sector economists have rowed in to emphasise the intractability of our housing problems.

It would be wrong to say these commentators are spinning the crisis, but, equally, it is plain to see how they might benefit from the perception that Ireland is facing a quasi-permanent shortage of residential property.

For Opposition politicians, an obdurate housing crisis provides the opportunity to sell hope.

…In recent years I have seen estimates of the annual home-building requirement ranging from around 20,000 to over 50,000 units. Based on recent pricing evidence, it seems those who were towards the lower end of this range have been the most correct.

In a nutshell, it looks like house price index (HPI) and rent inflation are slowing simply because supply is catching up with demand.

Looking ahead, high rents will continue to put pressure on tenants in the private rental sector.

But further output growth in the short run should start to bring inflation more into line with earnings growth.

Longer-term, if completions were to continue rising, as in recent years, the biggest concern would actually be about over-supply.

Anyone?

Ireland’s housing market is stabilising, despite claims to the contrary (Dr John McCartney, Irish Times)

Pic:Savills

Thanks Vanessa

11 thoughts on “You Have Nothing To Worry About

  1. Mr.Fart

    who will we get to talk about housing prices? oh! the guy who has an extreme vested interest in it! perfect. here comes a lot of truth talk and honesty.

  2. eoin

    Excruciatingly stupid “analysis” from director of a company with an obvious vested interest in a buoyant residential property market.

    House prices are a function of demand/supply, sure, but also affordability, cost of production, availability of production resources including labour, outlook and confidence, assumptions about the future including the future value of sites, development and mortgage finance availability. To restrict your analysis to “moderating prices equals demand/supply equilibrium” is excruciatingly stupid. Any analysis of demand would also look at population and household.

    Also, planning permissions haven’t “now contracted in two successive quarters”, 8,018 units were approved in the third quarter of 2018, followed by 6,682 in the fourth quarter which is indeed a contraction, but then they rose to 7,493 in the first quarter of 2019, the latest available, which is obviously an increase.

    I remember one economist at one property company in the late 2000s whose pronouncements haunted her for half a decade. Opinions based on flimsy evidence are fine for entertainment, but they’re like tushy orifices. I do hope anyone in policy challenges the opinion of this boyo.

    1. V

      here’s a challenge for Dr McCartney
      and maybe for the rest of us

      Explain this
      For Opposition politicians, an obdurate housing crisis provides the opportunity to sell hope.

    1. Stan

      Over supply would mean that most of us, with average incomes, could buy or rent houses somewhere near where we work and socialise, and, should we need to move we could do so quickly and easily. And because we wouldn’t be spending a huge proportion of that income on housing, we could afford to go out more, to but nicer things and thus create jobs and more people with average incomes who would be able to buy or rend and…..
      ….money would circulate instead of being sucked out of the economy by property. Builders could still make a living, and we would have the money and the incentive to do up our houses and apartments. Landlords would get a decent return on their investment without crucifying their tenants in order to pay back their oversized investment.
      It would even work for estate agents because there would be more churn in the market as availability would allow people to scale up or down as needed.

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