The Irish Times view on the housing market: lower prices are part of the solution

Simon Harris, who is set to be elected taoiseach Tuesday, made a point in his weekend speech to the Fine Gael Ardfheis of focusing on the housing issue. His promise to build 250,000 new homes over five years is illustrative of the kind of housing “auction” we will see during the general election campaign. Just how such targets might be achieved is the question.

The dysfunctional state of the residential property market was again underlined in the latest report by MyHome.ie – owned by the Irish Times – which has pointed to another acceleration in housing prices. It says that the median asking price for a home was up 6.5 per cent in the 12 months to the end of March, the strongest rise since the third quarter of 2022.

The key factor behind the price rise is the lack of supply.

The website says the number of homes listed for sale was just 10,935, a record low. This means there is a bidding battle for houses which do go on the market, which are typically selling for 4 per cent above their asking price.

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While these prices are moving houses out of the reach of many, the report says that there is a group of better-off buyers, benefiting from significant wage increases over the last couple of years, who have the financial firepower necessary.

To the extent that this reflects a strong jobs market, it is good to see people in work and earning more money. However, the impact on the housing market is unwelcome; the last thing needed now is yet higher prices. And the fear is that the market is becoming increasingly split between a smaller group who can afford higher prices and the majority of aspirant purchasers who see costs moving further and further out of their reach.

This is the nature of the challenge facing Harris, or whoever sits in the taoiseach’s chair. It encompasses all the interacting threads familiar now in the housing debate, ranging from the homelessness crisis to the shortage of social and affordable housing to the lack of smaller homes appropriate for a changing population. And a rental crisis which shows little sign of abating and where the risk is that short-term “fixes” actually hit long-term supply.

Politicians on all sides feel the need to promise quick progress and set targets of thousands more homes being built. But voters will surely react more favourably to a realistic, longer-term plan, which finds ways to reflect the priority which the State needs to give to this issue.

To make progress on housing, the new taoiseach must also be willing to upset some of his core base. Sinn Féin’s plans for a big fall in headline housing prices may be hard to achieve, but there is no doubt, either, but that a decline in the real cost of housing is a key part of the solution. If this upsets some of the Fine Gael home-owning base, then so be it.