House Supply Shortage in Ireland Even as Mortgage Approvals Reach New Highs

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Back in April a new record for mortgage application approvals was set in Ireland ever since banks started keeping track of approvals back in 2011. Lenders set a record for April mortgage approvals when around 4,300 people got clearance to borrow for a mortgage. This number is almost double that which was record back in 2020. Borrowers likely feel more comfortable getting back into the housing market and making a significant financial commitment as the Irish economy continues to bounce back from the negative effects of the pandemic. However, buyers may be facing a significant uphill battle after finally getting approved for their mortgage loans.

The rise in approvals, largely driven by first-time buyers, is going to a hit a bump once they actually start looking for a home, as the Irish housing market is currently suffering from a serious lack of supply in both new and second hand homes for sale. The number of available homes has decreased by about 40 pc ever since 2020 last year to as low as under 12,000 properties. The pandemic is responsible for this significant decrease and has only added to the ongoing housing crisis.

There may be record numbers of buyers trying to get new homes, but the pandemic has made current homeowners reluctant to sell. The fears of an ongoing pandemic having a negative impact on income and for some people even employment causes serious concerns for current home owners to sell their home. With the low supply of new homes available current homeowners are instead deciding to just stick with the homes they already have rather than running the risk of being unable to find a new home should they sell their current one.

Figures from the Central Bank of Ireland reveal that the value of mortgages in Ireland issued by the banks of Ireland has fallen by €166 million back in April. This means that many of the people approved for loans prior have been unable to actually find a home to buy and end up not using the mortgage loan they applied for. Also according to the Central Bank, the net flows of loans used on house purchase came out to only €408 million, which is the lowest amount on record since May 2018.

This housing supply shortage reveals that Ireland is still clearly feeling the negative effects of the pandemic. Many first-time buyers are feeling pessimistic about the prospect of owning a home, and feel that they may have to put off their dream of owning their first home for years while they wait for the supply of housing property in Ireland to increase.