House prices will “go beyond Celtic Tiger levels” without dramatic changes in policy, according to housing expert Dr Rory Hearne.
At the Fine Gael Ard Fheis this weekend, the Tánaiste Leo Varadkar set a target of building 40,000 new homes a year, warning that home ownership is now “out of reach for far too many”.
In an extended interview with Newstalk’s On The Record with Gavan Reilly yesterday, he said the target was not Government policy but had been discussed at Cabinet sub-committee level.
He insisted it was achievable – even if the target for next year is to reach just 25,000.
On Newstalk Breakfast this morning, Dr Rory Hearne, author and Lecturer in Social Policy at Maynooth University said prices will go above the Celtic Tiger peak before they begin to fall.
“I do think house prices are going to continue to rise,” he said.
“I think that they are completely unsustainable but they are going to continue to rise unless something dramatic changes.
“We have seen this in the UK as well. Government has been tinkering around the edges there. They didn’t make any dramatic increase in supply itself of affordable and social housing and prices have continued to rise there.
“Of course, they will fall at some point and we will see a crash at some point. The question is when, but I do think they are going to go beyond Celtic Tiger levels.”
Dr Hearne said a number of factors are combining to fuel the surge in house prices – including an increase in savings and fall in new builds during the pandemic.
He said investors buying up new properties in recent years is also a “significant factor” alongside Ireland’s “insecure and unaffordable” rental sector which is making people they have no option but to consider buying.
“We are seeing this having devastating impacts on people,” he said.
“People are contacting me with stories of having to make horrendous choices - for example putting off children or trying to save money in order to pay rent and then reaching the point where they can’t have children.
Listen back to full interview with Leo Varadkar online now: https://t.co/Wz1ihk2Mvh #OnTheRecordNT https://t.co/OpTgcDhyUu
— Gavan Reilly (@gavreilly) June 20, 2021
“People talking about emigration; people talking about staying in failed relationships, having to live in box rooms or sheds in gardens and underlying it all really is the supply of affordable housing – there hasn’t been any in the last ten years.
“Government hasn’t built social housing on any scale. It hasn’t built any affordable housing and we have a private market which, since the crash has been in one or other form of disfunction and has failed.
“So, we have Government policy failing and we have the private market failing combined with this new entry of global investors which has just created a very, very bad situation.”
Also on the show, the former chair of the Housing Agency Conor Skehan said he agreed with much of what Dr Hearne was saying – but rejected the idea prices would hit Celtic Tiger levels.
“As to the core of your question and the core of recent newspaper articles, ss that going to go back to Celtic tiger levels? the answer is no,” he said.
“I think we have to be aware of the fact we are standing on the edge of the precipice of the type of snowballing of alarmism that gave rise to the last crisis,” he said.
He said the most important thing Government can do to prevent a return to Celtic Tiger prices is protect the rental market.
You can listen back here: