Across Ireland, new housing developments are appearing, yet for many ordinary people, the dream of homeownership remains frustratingly out of reach. If houses are being built, why are so many unable to buy them? In a recent opinion piece for The Irish Times, economist David McWilliams highlighted a troubling trend: the State has become the dominant buyer in the new homes market, inadvertently pushing prices up and squeezing out first-time buyers.
This situation creates a paradox where the very government that individuals pay taxes to is now their main competitor in the property market. As property law specialists, we see the real-world consequences for aspiring homeowners every day. William Donovan, property Solicitor, explores McWilliams’s insights from a legal perspective and offers guidance for those navigating this challenging landscape.
The State as the Primary Buyer
McWilliams’s investigation into the accounts of major homebuilders, such as Cairn Homes, reveals a significant shift in the market. A large portion of new homes are being sold directly to the State through
“forward sales agreements.”
In these arrangements, a State agency agrees to buy an entire development before construction is complete.
For builders, this model is highly attractive. It removes market risk, eliminates marketing costs, and provides guaranteed sales, leading to substantial profit margins. However, this arrangement has profound implications for the wider market. McWilliams points out that normally, a bulk buyer would negotiate prices down. In Ireland’s current housing market, the opposite is happening. The State, in its urgency to increase housing stock, is paying premium prices, which sets a high benchmark for the entire market and drives up prices for everyone.
This trend effectively sidelines first-time buyers. Young professionals and families who have diligently saved are finding themselves unable to compete with the State’s purchasing power. This leads to a dysfunctional market where access to housing is determined not by savings and hard work, but by a queue for social housing—a process McWilliams terms the
“housing list-isation”
of the property market.
Three Phases of Ireland’s Recent Housing Market
McWilliams outlines three distinct phases in the Irish housing market since the 2008 crash, each presenting unique challenges for first-time buyers:
- Post-Crash (up to 2015): Immediately following the crash, the Central Bank introduced stricter lending rules. While intended to prevent another bubble, these regulations effectively locked out tens of thousands of potential buyers at a time when prices were at their lowest. This was a missed opportunity for a generation to get onto the property ladder.
- The “Vulture Fund” Era (2015-2020): In this period, international investment funds became major players, buying up entire new developments in bulk. This forced many young Irish people into renting, with their rent payments often flowing to overseas investors.
- The State-Dominated Market (Post-2020): Following political pressure to limit foreign fund acquisitions, the State stepped in to fill the void. Instead of allowing the market to normalise and empower individual buyers, government agencies became the primary purchasers of new builds, continuing the cycle of locking out ordinary citizens.
Each phase has seen first-time buyers systematically disadvantaged, first by restrictive lending, then by foreign funds, and now by their own government.
The Legal Implications for First-Time Buyers
From a property solicitor’s viewpoint, this market dynamic creates several legal and practical hurdles for first-time buyers. The competition from State-backed bulk purchases means that even when buyers secure mortgage approval, they often struggle to find available properties within their budget.
Furthermore, the complexity of the current market underscores the importance of expert legal advice. Navigating contracts, understanding the implications of bidding wars, and ensuring all legal requirements are met can be overwhelming, especially for those new to the process.
Here are a few key considerations for anyone trying to buy a home in today’s market:
- Be Prepared: Ensure your finances are in order and you have mortgage approval in principle before you start your property search. This puts you in a stronger position when you find a suitable home.
- Understand the Process: Familiarise yourself with the conveyancing process in Ireland. Knowing the steps involved, from making an offer to signing contracts and closing the sale, can reduce stress and help you avoid common pitfalls.
- Seek Professional Guidance: The value of an experienced property solicitor cannot be overstated. We can provide crucial advice on contracts, carry out thorough due diligence on the property’s title, and ensure your interests are protected throughout the transaction.
While the broader market conditions are challenging, taking proactive steps and having the right legal team on your side can make a significant difference.
What Does This Mean for the Future?
The situation described by David McWilliams is not sustainable. A healthy property market requires a balance between supply and demand, with opportunities for all types of buyers. When first-time buyers are consistently priced out, it has long-term consequences for social mobility, community stability, and the broader economy.
The government’s role in the housing market is complex, and the intention to provide social housing is commendable. However, the current approach appears to be creating unintended consequences that harm the very people it aims to support. A reassessment of housing policy is needed to ensure that the market serves everyone, not just large developers and State agencies.
How We Can Help You Move Forward
The Irish property market presents significant challenges, but owning a home is still an achievable goal. At HOMS Assist, our team of experienced property solicitors provides clear, practical advice to guide you through every step of the buying process. We understand the frustrations and complexities you face, and we are committed to helping you navigate them with confidence.
If you are a first-time buyer feeling discouraged by the current market, don’t give up. Contact us today for a consultation to discuss your situation and learn how we can support you on your journey to homeownership.
