Median incomes in Ireland have increased by more than 82% over the past 12 years, compared to the EU average of 18%, according to data published by the Irish Banking and Payments Association.
In its latest Housing Market Monitor for the third quarter of this year, the BPFI said that population is growing much faster than we are building houses to house people.
The population increased by more than half a million people between 2011 and 2022, while residential output only grew by 130,000.
The BPFI also said that while there was a large increase in new homes hitting the market in 2022, we are now seeing a decline in the number of new builds.
It noted that new home starting numbers for the first nine months of 2022 were 5.4% higher than those for the same period in 2019.
But that activity appears to be slowing year-over-year from a high of 35,000 units in the first quarter of 2022 to about 26,600 units in October.
BPFI CEO Brian Hayes said the large gap that currently exists between average rents and mortgage payments, coupled with strong underlying demand, will likely outweigh any negative impact on short-term mortgage demand that is likely to persist. a significant increase in supply.
It noted that the average first-time homebuyer mortgage payment was just over €1,000 for the first half of 2021 compared to the average monthly rent of more than €1,400 nationwide, with a gap which has greatly expanded in Dublin.
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“While demand for short-term mortgages may be impacted by the cost-of-living crisis and general economic uncertainty, this could be offset by factors such as pent-up demand and rising rental costs which will support buying demand. housing. future, which will lead to price pressures, albeit at a lower level, unless supply increases significantly.
Speaking to RTÉ’s Morning Ireland, Hayes said there had been “massive saving” in the economy and one of the reasons house price inflation has risen so sharply since Covid has been because of the level of accumulated deposits. , adding to and fueling home price inflation.
He said the average rental price is around 1,400 euros while the average mortgage is around 1,000 euros nationwide.
“Obviously it’s different in different cities, Dublin and so on. We think it’s a much better proposition for people to be able to own their own homes, but the problem is we have too many people looking for too few homes.”
He added that unless we focus on raising supply levels, we won’t be able to moderate house price inflation.
