Thursday, 14 February 2019
Department of Finance
My Department continues to monitor developments in the property market, including trends in prices and rents, on an ongoing basis. The Department uses many different sources to analyse the market, including its own research and analysis. In relation to affordability, the most recent and comprehensive work in this area was carried out by the ESRI in cooperation with the Department of Housing, Planning and Local Government. The report titled ‘Exploring affordability in the Irish housing market’, found thataffordability pressures are not universal and are most acute in the private rented sector, those living in the Greater Dublin Area and those on low incomes.
Ireland’s strong economic growth has allowed average wages to show consistent year-on-year growth since the beginning of 2016, with growth picking up in strength through 2017 and 2018. The most recent data available show the average weekly wage grew by 3.2% year-on-year in the third quarter of 2018. Although such growth rates are relatively high, the pace of inflation in the private rented and owner-occupier sectors over recent years has, unfortunately, been higher. Residential property prices increased by 7.1 per cent in the year to November 2018. The latest data from the RTB show that rents rose by 7.5 per cent year-on year in the third quarter of 2018.
The long-term solution to increasing affordability is to increase the supply of appropriate housing, including social, affordable and private housing. In response to this challenge - and in addition to the measures being implemented under ‘Rebuilding Ireland’ - Budget 2019 contained initiatives aimed at increasing the supply of new homes. In 2019, a total capital investment of €1.4 billion will be made in housing. Some €310 million over three years will be made available for delivery of affordable homes through the Serviced Sites Fund (SSF). Further, my colleague the Minister for Housing, Planning and Local Government, who has primary responsibility for housing policy, has brought forward a number of programmes to tackle the issue of affordability, including an affordable purchase scheme and a new cost rental programme.
The Department of Finance will continue to monitor developments in the housing sector in the context of increasing affordability and maintaining our competitiveness.