Minister English’s opening speech at the Institute of Professional Auctioneers and Valuers Conference

Check against delivery

 

Good Morning Ladies and Gentlemen;

Introduction and Welcome

Firstly, I would like to extend my thanks to Pat Davitt, CEO and David McDonnell, President of IPAV for their kind invitation for me to speak with you today.

I would also like to extend a warm welcome to representatives of the The European Group of Valuers Associations (TEGOVA) who join us today in Dublin from across Europe.

I know from talking to Pat that TEGOVA have developed a Blue Book on valuation standards, now in its eight edition, and this is an important contribution to the sector.

I would also like to acknowledge IPAVs commitment to the development of the sector, including through introduction of valuation standards and continuous professional development.

 

Land Development Agency

Turning to the broader housing agenda, a significant initiative to support the use of land for housing is the establishment of the Land Development Agency.

The Agency was established on an interim basis under secondary legislation, but primary legislation to underpin the basis of the Agency is currently being drafted with pre legislative scrutiny currently underway.

The LDA has an immediate focus on managing the State’s own lands to develop new homes, and regenerate under-utilised sites and  has access to an initial tranche of 8 sites across the country that have near term delivery potential for 3,000 new homes.

It is also developing a further site in Shanganagh in partnership with Dun Laoghaire Rathdown County Council.

Significant preparatory work on the sites is already underway and it is envisaged that construction activity will commence on the first homes in 2020, pending grant of planning permissions.

The development of LDA managed lands will make a substantial contribution to the achievement of wider Government targets for housing delivery in general and social housing specifically, as set out in Rebuilding Ireland.

The LDA will enhance supply, aiding the moderation in increases in housing costs and enabling new sources of affordable housing supply, including for cost rental accommodation.

 

Home Ownership and Affordability

Government is committed to providing real support to the housing market and those aspiring to home ownership.

Aside from encouraging greater supply, my Department has deployed a range of measures to help address affordability.

The Rebuilding Ireland Home Loan is a targeted support to help first time buyers to attain homeownership – homes that members of IPAV will sell.  Total funding available for the loan is over €563m for 2018 and 2019 combined.

Another important measure is the Help-to-Buy scheme. This allows first time buyers of new homes, up to a maximum value of €500,000, to get a tax refund of up to a maximum of €20,000.

It is a useful measure supporting affordability for first time buyers. For example the Indecon report commissioned by the Department of Finance to review the scheme found that;

  • HTB helps address a major constraint in the mortgage market, which is the requirement for a 10% deposit.
  • It has enabled home buying for many creditworthy purchasers who would not have been able to make the Central bank’s deposit requirements without it.

The HTB scheme has had a positive effect on the housing supply as it has encouraged the building of new units over the past three years.

The extension of the Help-to-Buy scheme (HTB) was announced in Budget 2020 by Minister Donohue. This was a welcome development that emphasises the Government’s efforts to support first time buyers.

As of the end of September, 14,571 applicants have benefited from funding of €215.8m through the scheme.

Also on affordability, it is important to mention the support that Home Building Finance Ireland gives to smaller sized builders which allows them unlock the finance to get on with the job of building affordable residential developments.

An example of the success of HBFI assistance can be seen with the recent launch of the Willmount View development in Kells, County Meath by local builder Kenny Timmons.

Pat will be delighted that IPAV Member, Alliance Auctioneers, are selling these new affordable homes in the commuter belt – 3 and 4 bedroom homes from €230,000.

I understand that the homes are selling well given their affordability and position in North Meath.

 

Brexit

In relation to the housing market generally, the impact of Brexit is by no means clear or certain, even at this stage.  According to the ESRI, the macroeconomic effects of Brexit are significant and negative for the Irish economy.

Depending on the nature of the UK exit from the European Union, Irish output levels could, by 2026, be up to 4 per cent less than a baseline no Brexit case.

The impact of Brexit on income levels and the labour market is fairly unambiguous; both are expected to be lower than a no-Brexit scenario.

In this respect, housing demand is likely to be lower due to both factors.

On the other hand, Brexit could result in a large number of people moving to Ireland from the United Kingdom.  This could see an increase in the number of people coming to live and work, particularly in Dublin, which would increase housing demand.

Therefore, one could see significant regional differences in the impact of Brexit on the Irish housing market; the rest of the country may be adversely impacted while the greater Dublin market may be less so.

My Department is closely monitoring the situation and will model and project the likely outcomes of Brexit in economic and demographic terms as well as on a geographic basis.

 

Housing Market Indicators

The current trends in Housing Market Indicators continue to point to the stabilisation of the Irish Housing Market with house price growth slowing, housing completions steadily increasing and with planning permissions and commencement notices figures showing a steady increase.

In the year to August 2019 the CSO Residential Property Price Index (RPPI) recorded a 2% increase in national residential property prices.

In comparison, in the year to August 2018 residential property prices increased by 8.9%. Residential Property prices in Dublin recorded a 0.3% decrease in the year to August compared to a growth rate of 6.7% over the same period in 2018.

Excluding Dublin Residential Property Prices nationally increased by 4.4% in the year to August, compared to an increase of 11.3% in the year to August 2018.

Activity in the Construction sector is healthier than a few short years ago. In the year to Q2 2019 there were 19,334 new home completions.

This represents a 19.4% increase on Q2 2018. Home completions in Dublin in the 12 months to June 2019 increased by 11.1% compared to the same period in 2018.

Indicators of future housing supply show promise that recent gains can be improved upon.

In the 12 months to June 2019, 24,226 units were commenced, an increase of 28.8% over 2018.

Commencement notices in Dublin increased by 21.5% in the year to June 2019 compared to the year to June 2018.

Commencement activity outside of the Greater Dublin Area has remained strong, with activity increasing by 40.8% in the 12 months to June 2019 compared to the same period in 2018.

With regards to planning permission, 9,611 units were granted planning permission in Q2 2019, a 41.8% increase compared with Q2 2018. In Q2 2019, 56.3% of the units granted planning permission were in Dublin and the Greater Dublin Area.

 

Mortgage Market

The Mortgage Market also shows healthier signs with a steady growth in the number of mortgage approvals and drawdowns.

The latest available data indicates that mortgage lending amounted to €2.64 billion (in respect of 11,794 mortgages) in Q3 2019.  In value terms, this represented an increase of 17.3% on the Q2 2019 position.

The value of drawdowns in Q3 2019 increased by 11.4% year-on-year.

In Q3 2019, first time borrowers borrowed €1.37 billion (compared to €1,153 million in Q3 2018) and this amounted to almost 52% of new mortgage lending in that quarter.

For 2019 as a whole, mortgage lending could exceed €9 billion. This would bring annual mortgage lending to its highest level since 2008.

For the first nine months of 2019, the total number of mortgage approvals were 37,364.  This represented an increase of 8.7% on the 34,384 approvals which were made in the same period in 2018.

In value terms, mortgage approvals for the year to end September 2019 amounted to €8.4 billion.

Having regard to the data on mortgage lending and approvals set out above, it is fair to say that there is no apparent impact on either the supply or demand for mortgages as a consequence of the ongoing Brexit.

It is also important to note that forthcoming research, which will be published in the coming week under my Department’s research collaboration with the Economic and Social Research Institute, will indicate that market dynamics are being driven by economic fundamentals, rather than a credit boom or unsustainable speculative activity.

Ladies and Gentlemen, I hope this gives you a greater overview of the housing market, its evolution, and the Government’s commitment to support it, as well as the role my Department plays in supporting the housing agenda.

My thanks again to Pat and to David for hosting this morning’s conference

I wish you well with the remainder of your conference.

Thank you.