It's your Mortgage Day!
This is the first in a short series of pieces looking at particular issues relevant to Budget 2017.
Although final details won’t be known until Budget day, October 11th, there is already an awful lot of debate as to whether an expected package of measures intended to improve the lot of First Time Buyers (FTB’s) and boost new home construction will help or hurt the Irish housing market.
With prospective homebuyers facing rising prices and limited supply, calls for the Government to ‘do something’ may be understandable but unless those measures are very carefully constructed, any intervention in the upcoming Budget could make things worse rather than better.
Getting housing interventions right will be very important if the Irish property market is to develop in a healthy fashion through the next couple of years.
It has been suggested that the new measures will give FTB’s greater buying capacity to purchase new homes and this, in turn, will stimulate new homebuilding. As the diagram below illustrates, FTB’s are now spending about double the amount they spent on new homes three years ago but that increase has primarily translated into more expensive homes rather than more homes.
The difficulties faced by would- be purchasers in recent years stem from strong and rising demand in the face of weak and largely unresponsive supply to this point;
This non-exhaustive information is based on short-term forecasts for expected developments in the economy and financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalised investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a judgment as of the date of the report and are subject to change without notice.