Dáil Éireann Debate, Thursday - 1 February 2024
230. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which house price inflation here is likely to affect economic performance in the future; and if he will make a statement on the matter. [4869/24]
View answerMy Department continues to monitor all aspects of the property market – including the rate of house price inflation - on an ongoing basis, although policy issues in this area rest with the Minister for Housing, Local Government and Heritage. According to the most recent figures released by the Central Statistics Office, annual property price inflation was at 2.9 per cent in November, this is a fall from 8.5 per cent in November of last year, but an increase from mid-year lows.
House price momentum over recent months reflects – in part – the pass through of significant but moderating inflation in the cost of construction materials. It follows that new home property price inflation at 10¼ per cent in Q3 2023 was the key driver of house price inflation; offsetting a fall in property prices for existing homes of 1 per cent on the same basis.
Over the medium term, imbalances between housing market demand and supply can create upward pressure on prices with the potential to impact competitiveness and labour supply, and thereby economic performance. The Government’s Housing for All strategy and its programme of housing delivery to meet the needs of a growing population and economy has been in place since 2021, and has underlined increasing supply and delivery against targets in every year since.
For 2022 and 2023 combined, new home completions exceeded targets by 8,800 units. For 2023, 32,700 new homes were built, a 10 per cent improvement on the previous year and some 4,000 units ahead of target. This represents a significant success in terms of response to the imbalance in supply characteristic of post-pandemic in many advanced economies.
Indicators of future supply are increasingly positive and trending in the right direction. Last year, construction commenced on 32,800 new homes, 22 per cent higher than the number of commencements in 2022, and the highest number of annual commencements since records began in 2014. New commencement activity in the final quarter of the year was particularly strong, with 8,900 commenced units in Q4 2023, nearly 50 per cent higher than the same quarter in 2022.
Elsewhere, data on planning permissions show permissions granted for the construction of over 37,500 new homes in the 12 months to September 2023. In addition to this, mortgage drawdowns for first-time buyers reached the highest level since 2007.
Despite the significant progress, challenges still remain and the Government is addressing these through reforms such as the Planning and Development Bill 2023, and the forthcoming revision of the National Planning Framework.
