A particular issue in the housing market is the lack of supply of second-hand homes. While attention tends to focus on the supply of new homes – itself a vital factor – housing transactions are dominated by second-hand properties. And a fall-off in supply in this area means the total housing stock for sale at the start of last month was just 11,100, according to the latest report from Daft.ie This was less than half the pre-pandemic 2019 average of 24,200 and 27 per cent down on one year earlier.
The Irish housing market remains in a strange place, as shown by this lack of second-hand supply at a time of a housing shortage and high prices. Economist Ronan Lyons writes in the Daft.ie report that housing prices have stabilised not because of rising supply but because demand appears to has fallen to meet the reduced level of supply. Estate agents Sherry FitzGerald said in a report last week that the inadequate supply of new housing is “cascading” through the market and having a wider impact.
There has been some pick-up in new housing supply, with 29,000 to 30,000 completions likely last year. But in terms of the market overall, the drop in second-hand supply has still meant an overall decline.
Clearly, higher interest rates have been a factor here, limiting the ability of homebuyers to bid for second-hand properties and also making it more difficult for those hoping to trade up. State incentives such as the Help-to-Buy scheme are only available on newly-built homes – as part of the rationale is to encourage increased supply. But as many first-time buyers need these supports to afford to buy, the second-hand market remains in a kind of a limbo.
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The long-term solution remains higher supply at all points of the market. If interest rates do start to fall this year, second-hand supply may pick up a bit. While the policy focus will correctly remain on new, affordable supply, the second-hand market will be a vital indicator for housing in 2024.
