€100,000 viability gap per new apartment means the homes we need won't be built, developers warn
'Would-be homeowners are not willing to pay €500,000 for an apartment'
Sean Pollock and Fearghal O'Connor
Today at 21:30
A number of Ireland's most prominent housing developers have voiced major concern over the Government's handling of the ongoing housing crisis.
One big international player in the Irish market, the US property firm Greystar, warned that housing investment is now being deployed in other countries due to 'problematic policy changes' in Ireland that had created 'uncertainty in the market and often unintended consequences'.
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RTÉ News
34 minutes ago
- RTÉ News
What do falling interest rates mean for borrowers and savers?
As widely expected, this week, the European Central Bank (ECB) cut interest rates by a quarter of a percentage point, bringing the main deposit rate down to 2%. It was the eighth consecutive cut, and the main interest rate is now at its lowest since the end of 2022. Between September 2023 and this month, rates have fallen by two percentage points overall - down from 4%. While we're still a long way off from the zero-percent ECB rates that persisted in the wake of the financial crisis, the fresh reductions bring more welcome news for borrowers. The 180,000 tracker mortgage customers in Ireland will see an immediate benefit, with their loans tracking the main ECB lending rate. Borrowers on variable rates will also see repayments fall but not necessarily right away. It will depend on the terms of their loan. Some lenders adjust variable rates monthly, others do it quarterly, while it can also be done on an annual basis. The ECB's 25 June basis-point cut means that for every €100,000 borrowed, monthly mortgage repayments will fall by around €13. This means payments falling by €65 monthly - or €780 annually - on a loan of €500,000. However, fixed-rate customers - which the majority of borrowers tend to opt for - won't see their repayments dropping. Though they will be in a stronger position to get a lower rate once their fixed-term has ended. Irish mortgage rates sixth highest in euro zone Even with the these latest cuts, Irish mortgage holders are still paying nearly half a percentage point more in interest than their euro zone counterparts, with rates here - averaging 3.67% - the sixth highest of the 20 countries using the euro. Fixed rates here can be as low as 3%, but after the ECB announcement on Thursday Sinn Féin Finance spokesperson Pearse Doherty pointed out that some borrowers, whose loans were sold to so-called vulture funds by the pillar banks that needed to offload bad loans, are paying much higher rates. According to Mr Doherty, last year there were over 100,000 households paying over 6% in interest to such funds, with 7,000 paying over 8.5%. He said "that can mean handing over thousands of euro more a year to these vulture funds than they would even with the high rates at traditional banks". The Sinn Féin TD is also calling on lenders to pass on the benefit of the ECB cuts promptly, adding that "the refusal by banks to pass on the benefit of interest rate cuts ... is completely unacceptable and the Government should immediately call in the banks. "Banks in the main have not cut mortgage interest rates in line with the four-interest rate cuts this year," he said. But lenders will argue that they did not pass on all of the increases when rates were going up in previous years. Good for borrowers, bad for savers Anyone investing money and hoping for a decent return won't like falling interest rates. Irish savers have around €160 billion on deposit and in recent months all of the main lenders - as well as the fintech banks - have reduced rates for savers and it's getting trickier to get make money on savings. Around 3% is the best rate available right now, though it you're looking to save more than a couple of thousands euro every month the rate will be closer to 2%. But these deposit rates are falling in line with the ECB cuts, and by the end of the year the best rates on the market for savers are expected to be nearer 1.5%. The advice to those looking to invest is to do so sooner rather than later to try and lock in a higher rate. What's likely to happen next? Interest rates are the ECB's main tool for managing inflation across the euro zone, with a target level of 2%. When inflation goes higher, rates are increased to discourage borrowing and encourage saving to bring it down. It's the opposite when inflation is lower - rates are lowered to help boost economic activity. Latest figures show euro zone inflation has fallen just below 2% (1.9% in May down from 2.2% in April) and with fears of global trade uncertainty, weaker economic activity, and a strengthening euro, interest rates are expected to be reduced further in the coming months. The general consensus is that we'll see the ECB lower its main deposit rate by another quarter of a percentage point - to 1.75% - and then settle at that point. This means mortgage holders should get a further boost, while savers will need to look that bit harder to maximise any returns. However, as with most things economy-related, trends are cyclical and we could easily end up in a new economic reality in the near future that necessitates the next cycle of either interest-rate cuts or rises.
Irish Times
2 hours ago
- Irish Times
After years of economic calm, Ireland could be facing a storm. Are we better prepared this time?
On the day that Brian Cowen was elected taoiseach on May 7th, 2008, one of the headlines in The Irish Times read 'Poor old unlucky Bertie '. The Mahon tribunal had stampeded through Ahern's murky personal finances with a coach and four earlier that year, and Ahern had no choice but to fall on his sword. His successor Brian Cowen had been Fianna Fáil 's dauphin prince for a decade. In a for-once becalmed and benign Dáil, he listened as party leaders heaped praise on him and wished him well. In his own speech, he said he wanted to care for the less well-off in society and create 'caring and compassionate communities'. That day was as good as it got for Cowen. A retrospective headline could have read: 'Poor old unlucky Biffo'. And as for Bertie? He dodged a bullet that day. The first slate clouds of the coming storm were massing just over the horizon. READ MORE There were some small signs already evident. The State's revenues in the first four months of the year had fallen alarmingly. Yet, the Versailles levels of spending continued apace. [ Is this Government repeating the mistakes of 2008? Opens in new window ] That was only the beginning of the tragedy that was to unfold for Cowen and for the State. By June came the confirmation of a slump in house sales, and a significant downturn in bank profitability. The late Brian Lenihan mused that month it was just his luck to become minister for finance at the moment the building boom had come a 'shuddering halt'. The government began to batten down the hatches but the hurricane had already made landfall. Those who write about politics love the phrase of George Santayana's that 'those who cannot remember the past are condemned to repeat it.' Since the economic crash there have been several extraordinary events that might have presented credible threats to political stability across Ireland, Europe and the world: Brexit; the Covid-19 pandemic; the war in Ukraine; the energy crisis; the terrible events of October 7th and the unspeakable annihilation of Gaza by Israel. Now we have a bellicose Trump presidency, brimful with threats and tariffs. [ Corporate tax take tumbles 30% for May with €1.1bn less over same month last year Opens in new window ] The State has somehow managed to weather all those storms. That has been partly thanks to huge windfalls from corporation tax that have given Ireland a buffer from the worst impacts of Covid and the cost-of-living crisis. Annual once-off payments for households became the norm during the last Dáil term. Seemingly, our economy still retains the knack of defying gravity. Two sets of figures, published on Thursday, suggest that all looks good for the public finances. The Department of Finance confirmed there has been an increase of 3.6 per cent in tax revenue so far this year. Economic growth also looks strong. According to CSO data, gross domestic product (GDP) grew by almost 10 per cent in the first quarter of 2025, driven by a surge in exports. When President Trump started sabre-rattling about tariffs earlier this year, many people discovered for the first time the kind of astronomical figures associated with multinationals based here. Exports to the US from Ireland were worth €68 billion in 2024, two-thirds of which came from pharmaceuticals and medical devices. Beneath that veneer lies a more complicated scenario. Since 2011 there have been two parallel Irish economies, a global one and a domestic one. During the best years, GDP figures have been spectacular. But the picture was distorted. That part of the economy that doesn't feature gleaming towers in the Docklands, space-age pharmaceutical companies or aircraft leasing was lagging behind dramatically. This economy is made up of PAYE employees, or people working in less glamorous sectors, and those in the gig economy. Their reality has been a constant struggle to pay bills as prices escalate, to meet childcare costs, to scrape together enough to pay the mortgage or rent and put petrol in their cars. A new category, modified domestic demand (MDD), was created to better reflect that domestic economy. For example, when you strip out the multinationals, growth in MDD was less than 1 per cent in the first quarter of 2025. Not tanking by any means. But slowing. Tax take also seems to be holding up overall in 2025. However, the picture is complicated by the Apple tax money. When that is excluded, corporation tax is no longer up 18 per cent, but is more than 9 per cent down on the same period last year. Is that a sign that that ATM is finally running out of cash? It feels hard to escape from the sense that after years of generally smooth cruising, we are now facing turbulence. You can see signs of that wariness at institutional level. The Government has said categorically there will be no once-off payments this year. It has also revoked a plan to extend statutory sick-leave entitlements by two days. Sensibly, too, it has began an urgent all-hands-on-deck diplomatic and trade offensive to diversify away from the US and open up new markets elsewhere. One thing that has been reminiscent of the Celtic Tiger over the past decade is the willingness of governments to spend a lot of money. The capital housing budget has had a fivefold increase from €1.2 billion in 2017 to €6 billion in 2025. The health budget has almost doubled in the same period, up from €14.6 billion in 2017 to €25.8 billion this year. Overall State expenditure topped €100 billion for the first time in 2024. That's all well and good, unless we encounter a 2008-style collapse in revenue. Are we better prepared for the coming storm than 17 years ago? The answer is probably yes but even that might not inure us.
Irish Independent
3 hours ago
- Irish Independent
‘The figures for 2025 are correct, but the 2024 figures were wrong': Why the tourist industry is staying optimistic about the outlook
'If anyone asks, Irish tourism is doing very well, thank you very much,' Alva Pearson Downey, CEO of the Inbound Tourism Operators Association (ITOA), said at the end of May.
