With competition for loan approval building, home development companies are feeling the heat. This year has proved to be one of the most difficult for possible consumers to obtain loans, largely due to the uncertainty that Brexit brings to the table. Due to the lack of accessibility of funds when attempting to purchase a home, many homes have simply gone unfilled.
Goodbody Stockbrokers, a company that specializes in asset management and global investment funds, has taken a clear interest to the changes that are currently happening in the market. This company developed a house building tracker, which in turn showed that from April to June 2019 there was a sharp decline in the output of newly developed housing.
This is largely due to the fact that without the high availability of loans, many homes simply are not getting sold. In the lower priced areas of the housing market, there is significant competition but any home that is priced at or above €500,000 has been struggling to get off the market. In general, this trend is showing that affordability is becoming a major deciding factor in consumers decisions to even enter the market.
Due to the inability to sell homes, especially those that are a bit higher in price due to the newness, has slowed builders uptake of new projects. Without selling some of their old properties, they are unable to begin working on other projects. This inability to continue building at the projected schedule has decreased the amount of new homes in the market by 4pc.
Especially in Dublin, homes are having trouble selling; this is primarily due to the average price of a home being nine times the average earnings. With consumers only being able to take out three and a half times their total yearly earnings in loans at most, these people in search of a place to live had little housing options that are within budget.
With home prices high, many people have turned to apartments or flats as the next best option for a sustainable home alternative. Many builders have begun picking up on this, which has been shown by a 17pc drop in home completions by builders within the most recent period. Without a sustainable market, these companies are trying to pull back their building amounts in order to hopefully avoid the loss of resources and funds.
Overall, this change in trends in home sales has greatly affected both buyers and sellers. Hopefully, after Brexit has smoothed over the percentage of home sales will begin to rise substantially.