Housing market remains strong with increased supply and sustained pent-up demand – BPFI Housing Market Monitor
- At current rates total completions in 2023 could reach over 30,000 units
- Strong economic fundamentals and latent demand drive robust FTB mortgage activity despite overall market slowdown
- Significant medium-term demand for housing both for purchase and rental with 175,000 25-39 year olds living with their parents and 330,000 homes renting privately
Tuesday 12th September 2023 – The latest Housing Market Monitor Q2 2023 published today by Banking & Payments Federation Ireland (BPFI) shows that Ireland’s housing market remains strong, with increased supply of new housing and continued pent-up demand.
Encouraging signs for future completions
Outlining the key findings from the monitor, Ali Uğur, Chief Economist of BPFI stated: “Current indicators show that new housing supply remains strong. On a rolling 12 months basis, a total of 30,546 units were completed at the end of Q2 2023 compared with 24,841 units during the same period in 2022. If the sector continues to build at the rate seen in the second half of 2022, it is likely that total completions in 2023 could reach over 30,000 units. Further encouraging signs of future activity can been seen in the 18,546 units that were commenced in the first seven months of 2023 almost 2,000 more than in the same period in 2022.”
Strong FTB demand for mortgages despite wider market slowdown due to drop in switching
“Looking at the mortgage market activity, the latest BPFI data show that in the first half of 2023, there were 20,389 mortgage drawdowns, a 7% decline year-on-year, mainly due to the significant drop in switching activity. It is likely that the total number of mortgages approved and drawn down at the end of 2023 will be lower than the levels observed in 2022. At the same time, with strong economic fundamentals and latent demand, we expect solid demand for mortgages from the first-time buyer (FTB) segment. FTBs accounted for almost 62% of the volume and value of mortgage approvals in July 2023 with almost 30,000 FTB mortgages approved valued at nearly €8.4 billion, the highest annualised levels since the date series began in 2011.”
“The government’s Help to Buy scheme and First Home Scheme provide useful indicators in terms of future potential FTB mortgage demand. In the first eight months of 2023, there were 23,635 applications to the Help to Buy scheme, compared with 19,354 in the same period in 2022. About 4,800 claims had been made in 2023 to date, leaving a large volume of applications in the pipeline. Similarly, the First Home Scheme reported about 1,900 approved applications for the scheme up to the end of June 2023, with 456 homes bought under the scheme.”
Robust medium-term demand for housing both for purchase and rental
Mr Ugur concluded: “Overall, the housing market remains robust with an increasing supply of new housing and continued pent-up demand. The number of homes rented privately increased by 8% to about 331,000 between 2011 and 2022 and many of these renters are likely to seek to buy in the future. In addition, CSO Census 2022 found that more than 175,000 adults aged between 25 and 39 were living with their parents, up from 151,000 in 2011. Combined, these cohorts indicate that there is significant medium-term demand for housing both for purchase and rental. With increasing supply and declining price inflation, affordability pressures should ease for this cohort expecting to purchase a home in the medium term.”
Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland. Together with its affiliates, the Federation of International Banks in Ireland, and the Fintech & Payments Association of Ireland, BPFI has over 125 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.