The Irish economy continued to grow strongly in 2018. Most of the key economic indicators which impact the residential housing market point to continued positive performance in the sector. There are clear challenges in 2019 and, apart from obvious ones like Brexit, the threat of higher interest rates increasing mortgage payments and general affordability may become a factor sooner rather than later. Nonetheless, the Central Bank, ESRI and other commentators have optimistic outlooks for economic performance of c. 4.5% GDP in 2019.
All projections, however, are based on the assumption (or hope!) that an acceptable deal between the UK and EU will be agreed to avoid a hard Brexit, as our economic wellbeing is highly dependent on a favourable outcome.
The Central Bank’s mortgage lending rules have had the intended effect of containing property prices rises. Although new housing delivery increased, as viability improved in more locations, new apartment and house delivery costs remain challenging, with tender price inflation a significant factor for the market.
We hope that the newly formed Land Development Agency will quickly increase the supply of Stateowned land to the market to support supply at affordable levels. We engaged extensively with policymakers in 2018 on how to better use existing buildings for residential use and we are pleased to see these proposals being put into action.
The last Census report over 2 million housing units in Ireland, many of which are unused or underutilised. So while new supply is important in many locations, finding better ways to use our existing stock can also improve supply, rejuvenate areas and revitalise communities.
The Government’s recent report – Bringing back homes – Manual for the reuse of Existing buildings – outlines what supports are now available to undertake this much needed renewal. We published our ‘Rejuvenation of Irelands Small Town Centres’ report last year, and strongly recommended the reuse of existing buildings on high streets to tackle the decline of our towns and villages.
We are pleased to note that Vacant Housing Officers have been appointed in many local authority areas to streamline the development process. The residential rental sector has experienced further rent inflation in 2018. Our members accurately predicted the annual rent inflation rates as reported by the RTB of 5.4% for existing tenancies and 8% for new tenancies. The SCSI prediction for 2019 is that rent inflation will remain unchanged for Dublin at 4-5%, despite a raft of regulatory changes. Attracting and retaining skilled staff has been an ongoing challenge for businesses.
It’s encouraging to see that the increased number of school-leavers considering property as a career choice. The CAO points for most third-level property courses are on the rise and the prospects for those new entrants looks very positive. In our ‘Employment Opportunities and Skills Requirements 2018 Report’, the demand for qualified property professionals is considered to remain high, even in periods of lower economic growth, due to the continued undersupply of graduates during the downturn and the increased demand for professional services from corporate, institutional and statutory agencies. Encouragingly, many students identify the achievement of chartered status as their goal, with global recognition as an additional benefit.