Irish home price growth set to slip 4% over next year – The Irish Times
Irish home price growth is set to ease to 4 per cent over the next year, following a sharp spike in the wake of the worst of the Covid-19 pandemic, according to a Society of Chartered Surveyors of Ireland (SCSI) survey of 130 estate agents and valuers.
Still, respondents to the survey predict that prices will continue to be underpinned by ongoing supply shortages, even as households grapple with soaring general inflation, geopolitical uncertainty as a result of the Ukraine war and imminent interest rate hikes from the European Central Bank, according to the report.
Residential property price inflation was running at an annual rate of 14.2 per cent in April, albeit off 15.1 per cent recorded for the previous month, but still well above the 4.5 per cent pace at which prices were growing in April last year, according to Central Statistics Office data. Prices have soared 118 per cent from their post-crash lows of 2013, but remain 2 per cent below a 2007 peak.
The Irish Central Bank forecast in April that 24,500 houses and apartments will be completed this year, rising to 29,000 in 2023 and 33,000 in 2024, with the average coming well off the 35,000 new homes that analysts estimate need to be built annually over the medium term.
Indeed, the Central Bank latest estimates for the three years mark a downgrade from what its economists had been projecting earlier this year.
“While SCSI agents and valuers expect property prices to rise by an average of 4 per cent over the next year that has to be seen in the context of the current record levels of inflation,” said John O’Sullivan, chairman of the SCSI Practice & Policy Committee. “Right now, the current rate of consumer price inflation is circa 8 per cent, which means that compared to consumer prices, the projected increase is actually a reduction of 4 per cent in real terms.”
Mr O’Sullivan said that with the Republic’s population now in excess of five million , a trend towards smaller average household size, current positive net migration, plus commitments to provide accommodation to incoming refugees from Ukraine, “it’s clear the need to unlock additional housing supply remains acute”.
Meanwhile, Sherry FitzGerald, the State’s largest estate agent, said the rate of house price growth is exhibiting signs of moderation, with the average value of second-hand homes rising by 1.6 per cent in the second quarter — marking the slowest quarterly growth rate in more than a year.
Nevertheless, in the 12 months to June, average values have increased 9.6 per cent.
“Although still strong, the frenzied level of bidding activity observed in the recent past has eased off,” said Sherry FitzGerald managing director Marian Finnegan. “Internationally, many markets are similarly noting an alleviation in the rapid appreciation in values which had characterised 2021.”
Some 37 per cent of all vendors of second-hand homes with Sherry FitzGerald during the past three months were buy-to-let investors selling properties, the highest level since the firm began tracking this data in 2003.
An exodus of small, private landlords from the rental market in recent years has been attributed to high taxation relative to institutional investors, rent controls, and constantly changing industry laws.
Separately, DNG highlighted that house price inflation eased in the second quarter of the year. Values in Dublin rose at an annual rate of 8 per cent for the period, down from 8.8 per cent for the 12 months to the end of March. Prices outside Dublin eased to 12 per cent from 13.6 per cent.
DNG director of research Paul Murgatroyd said moderating house prices suggest the Republic “may well be closer to another peak in the market. Affordability continues to be an issue impacting buyers, particularly in Dublin and the mideast regions due to strong price growth in the last two years.”