Surveyors say Central Bank lending rules bring clarity to housing market

Surveyors say Central Bank lending rules bring clarity to housing market

But concerns over unintended consequences on mobility, rents and housing supply remain

Wednesday 28th January 2015. The Society of Chartered Surveyors Ireland (SCSI) has said that new residential lending rules due to be introduced by the Central bank will protect against some of the risks associated with lending but are likely to negatively impact some segments of the market.

The Society, which represents property professionals across Ireland, welcomed the fact that there is now clarity on what the Central Bank rules will be and agree with them in principle.

Simon Stokes, Chair of the Residential Professional Group of the SCSI said “the impact of the rules on deposits and loan-to-income are most likely to be felt by buyers in Dublin and other Cities where property prices in established areas greatly exceed the €220,000 threshold for which a 10% deposit is required.

We are also concerned about the impact on the rental market. According to the latest SCSI Housing Market Outlook, rents are up 11% nationally and 15% in Dublin. The new rules are likely to result in more people renting because they cannot afford to buy and this will push rents up further” he said.

The Society also believes the new rules will reduce the levels of mobility in the housing market which will mean that homeowners who would usually trade up to larger homes will be unable to do so – thus further reducing supply of starter homes in the market for first time buyers.

“The other concern is that the rules will impact negatively on development and hinder new supply being brought onto the market. The viability of development is still limited in some areas and the new rules may result in a risk of some housing developments not going ahead. We need to ensure that the new rules are balanced out by a supply response to ensure some level of sustainability in the market” Mr Stokes concluded.