Dr John McCartney, Director of Research at Savills Ireland
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.