What’s going on with the Irish Housing Market 2021?

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In 2021, many people in Ireland still cannot afford to purchase a home or apartment. The Irish Housing Market is also not properly structured to support lifetime rental. Some have been forced to emigrate from Ireland, because they have been priced out and can no longer afford to live in their hometowns or cities.

There is a major supply-demand imbalance present in the Irish Housing Market. This imbalance is expected to continue due to the limits that the COVID-19 pandemic has placed on housing supply while demand for Irish housing remains high.

People are frustrated with the government and its failed public housing policy, as well as the central issues of housing supply and affordability displayed throughout the country.

COVID-19 Impact on Irish Housing 

The COVID-19 pandemic, and the major restrictions and lockdowns that it has caused, has led to a reduction in housing capacity and construction output. The result: continued uncertainty concerning the Irish housing supply.

According to the Financial Times, it is projected that just 21,000 homes and apartments will be built this year. This compares to the over 90,000 homes built during the peak seen in 2006. This large difference is due to the tighter lending restrictions that the Central Bank of Ireland has established in addition to COVID-19 related construction delays.  

The housing shortage that has resulted from these conditions could last for multiple years. Additionally, its impact could be seen across a variety of housing accommodations including smaller apartments in the city to larger, family homes in the suburbs. The shortage in housing supply has also led to an increase in housing prices.

Other Factors Affecting Irish Housing

Today, getting a mortgage loan that is large enough to make buying a home affordable is difficult. The mortgage lending measure enforced by the Central Bank caps loans at 3.5 times gross annual income. This has led to a significant portion of the population being effectively locked out of the Irish Housing Market, because they do not have enough funds from the mortgage loan and their deposit to purchase a home.

Builders are also struggling to gain access to credit in Ireland. Additionally, the relatively high construction cost compared to sales prices in Ireland has made it challenging for builders to increase their output. This has further contributed to the shortage in the supply of housing displayed in Ireland.

Supply and demand imbalances characterize the current Irish Housing Market. Housing shortages and continued, strong demand for homes have made home buying a challenge.