4 - Another Property Bubble?

Are we seeing another Dublin housing bubble? Rising prices predicted to continue and similarities with the 2000s would seem to suggest so. Nevertheless, it is difficult to see how this ‘bubble’ will burst. Hypothetically, a sudden increase in housing supply would result in a price fall, but where will this come from?

Source: Criticalmediareview.wordpress.com

On the surface, the current Fine Gael/Fianna Fáil/Green Party government have made attempts to combat the shortage. A recent GP-proposed ‘dereliction tax’ would penalise property vacancies and encourage occupancy, increasing housing availability. Additionally, the government’s flagship Housing for All policy includes ‘33,000 new [housing] units per year, on average, until 2030’.

Source: MerrionStreetNews

However, the policy involves privately outsourcing the construction of social housing, so the government forfeits the ability to ensure low prices for consumers, despite cost-savings to the state. Critics such as NUI Maynooth’s Dr Rory Hearne have pointed out the lack of affordability of the new supply, stating that many ‘will not be able to own their own home’ and will become reliant on the private rental sector. This follows an ongoing trend towards the European rental model, as Ireland’s rate of home ownership has already fallen to 67% from 80% in the 1990s.

Source: Sinn Féin

Opposition party Sinn Féin (favourites to lead the next government,) also renounce reliance on the private sector, claiming that they will provide ‘Ireland’s largest ever public house-building programme’ including widespread low-cost housing. In theory, this would surely ‘burst the bubble’. But will they get the votes they need? Will the 67% living in household-owned accommodation move to protect their wealth? Will Sinn Féin fulfil pre-election commitments if elected?

 I wouldn’t like to be a betting man.