Property market trends could revive the “unsustainable” boom-era practice of long-distance commuting between Dublin and its hinterland, a new report has warned.
The Economic and Social Research Institute (ESRI) said lower prices outside Dublin and Central Bank loan caps could force households to seek housing beyond the capital.
This would lead to long commutes, a scourge of the boom times.
The study of price and supply developments by ESRI research professor Edgar Morgenroth found that price differences between Dublin and other counties have reached levels not seen since the boom.
“The data shows purchasing patterns similar to those seen during the boom years may re-emerge if affordable housing is more readily available outside Dublin and the other areas of high demand, resulting in unsustainable long-distance commutes for house buyers,” Prof Morgenroth said.
National data suggested higher prices led to increased supply but this was not the case in Dublin or the Dublin commuter counties.
Hoarding
Highlighting a big shortage of new homes in Dublin, he said the market in the capital may still not be profitable for developers.
However, developers might also be hoarding land in anticipation of higher prices and profits in the future.
“Developers may be constrained by high construction costs in Dublin, planning regulations that add to costs, lack of suitable development land or may find it difficult to raise credit for larger projects.”
Prof Morgenroth said the Central Bank loan caps may put upward pressure on prices in counties surrounding Dublin.
“In areas with lower prices, the caps may not constrain buyers. This could prompt a “ripple effect” on prices.
The Central Bank will review the loan caps this summer, but it has said the restrictions could be tightened, loosened or kept at their present level.
The ESRI study found demand for housing was greatest in Dublin, its commuter belt and larger cities including Cork and Galway.
However, the increase in housing completions between the first quarter of 2013 and the last quarter of 2015 was concentrated outside those regions.
“The disparity of pricing between counties is as large as it was during the boom years, with increases of more than 30 per cent in Dublin city, Galway city and Cork city from 2013 in comparison to increases of less than 10 per cent in many counties,” the ESRI said
