Commenting on the recent CSO Residential Property Price Index for October, IPAV, the Institute of Professional Auctioneers & Valuers, said prices have picked up again as already reported by auctioneers.
“Our agents have seen a pick up since September which tallies with today’s CSO Index.
“Overly aggressive interest rates rises are having an effect but with a high proportion of non-mortgaged buyers, which could be up to 40%, we’re not seeing a major impact on prices.
“However higher interest rates and lack of availability of suitable properties are impacting socially in that home ownership has become a pipe dream for many," Pat Davitt, IPAV’s Chief Executive, said.
He said high interest rates, which have been a feature of State funding for the last number of years when it should not have been and long before the ECB started raising rates, have dissuaded many able small builders and developers who struggled to make projects viable.
“ECB interest rate rises have added to that situation, unfortunately, as has our dysfunctional planning system. The concern now is that we could see a further lack of confidence in investment, unless current ECB policy is reversed, and sooner rather than later," he added.
Mr Davitt said it is notable that Canada is adapting an old system of pre-approved designs so homes can be built quickly and economically to tackle its housing affordability crisis.
“If we are to ensure social cohesion into the future we too need to adopt some ‘outside the box’ measures,” he concluded.
Tenant Bill To Exacerbate Flight of Landlords
Meanwhile, the IPAV has stated that the Residential Tenancies (Right to Purchase ) Bill 2023, intended to give tenants a first right of refusal to purchase a rented property when it’s put up for sale, is unnecessary since what it seeks to provide is already happening in the market, the legislation now likely to encourage the further flight of private landlords from the market.
Presenting to the committee IPAV Chief Executive, Pat Davitt said it would set a precedent for intervention in a landlord’s right to sell a rented property that any future Government could easily extend and consequently it would prompt more private landlords to flee the market, further reducing the availability of rental properties.
“It would have the effect of further diminishing the rights of property owners, making investment in rental property a far less attractive proposition than it has already become because of excessive and unbalanced regulation between owners and tenants.
"This Bill would elongate the sales process, frustrating many potential and genuine buyers where a tenant could not match those offers but for whatever reason decides to exercise all available options.
“In fact the legislation could raise tenant expectations in an unrealistic manner and effectively set a minimum period over which a sale takes place," Mr Davitt stated.
He said many landlords may have restructured a loan but with increasing interest rates, are once again struggling to meet repayments.
“A quick sale, never intended, may now relieve pressure and rescue them financially. Deputies, Senators, I assure you from what our members are seeing, the legacy of the last financial crash lives on. Increased interest rates have, sadly, set fire to the dying embers of unsustainable debt for many,” he added.
Mr Davitt noted that a tenant’s right to bid to purchase does not apply to the sale of multiple unit developments, further exacerbating the unequal treatment of private and institutional landlords.
He said while the Bill does make provision when property is being transferred for no or partial consideration to a family member, it is not comprehensive enough.
“The tenant’s right to bid for the property should not arise where a landlord intends to transfer the property to a spouse or certain defined family members, as well as inheritance rights.
"Rather than further restricting the rights of private landlords IPAV would encourage legislators to prioritise measures that will increase supply. If supply is improved, virtually all of the other difficulties in the market will be eased and fall away, the market will work,” Mr Davitt remarked.
This Bill, if implemented, he warned, would make investment in private rental much less attractive at a time when this is already a grave concern.
Research by IPAV and IPOA, the Irish Property Owners’ Association, and involving over 880 such landlords last year found:
· The major cohort by far, 43%, became a landlord for pension purposes;
· The next biggest cohort, about a quarter, did so to gain an income;
· Only 13% did so for ‘extra income’;
· Accidental landlords formed less than 10%;
· Over 70% were self-employed and
· Almost six in every 10 had debt to service.
