THE ECONOMIC AND SOCIAL Research Institute (ESRI) has said that a significant increase in the demand to buy houses particularly in urban areas where housing stock is low could result in prices rising.
A report from the ESRI by economists David Duffy and John FitzGerald says that in key urban areas the stock of vacant houses is not very large particularly in the greater Dublin area.
If there is a sudden increase in demand to buy houses then this low number of houses could see prices rise again although the report says it is unlikely prices will return to boom time levels.
“A significant increase in demand to buy houses in these urban locations could exhaust the vacant stock and, given a very low level of house-building, this would begin to put upward pressure on prices,” the economists conclude.
Prices could rise in urban areas such as Dublin, Cork and Galway with the report saying that four in ten of those currently renting – many of whom are under the age of 35 – could afford a mortgage.
The report estimates that there could be demand for between 15,000 and 20,000 houses a year as younger people form households. But it says that it is dependent on the economy picking up in the coming years.
The report adds: “Whether this demand will materialise in practise will depend on the availability of mortgage finance from the banking system.
“In a somewhat longer time scale, there will also probably be some pressure to increase the level of building from the current very low level. However, such a change would also depend on the availability of finance for building.”