House prices jump by €20,000 amid Covid ‘supply shock’

House prices in Ireland have increased by an average of €20,000 in the past year, according to property website Daft.ie.

This is roughly twice the rate of the inflation seen in 2018 and 2019 and comes on the back of major “supply shock” triggered by a downturn in construction and agents deciding not to list properties because of the Covid restrictions on showing them.

In its latest quarterly report on the property market here, Daft.ie said the total number of properties available to buy on March 1st this year was just under 12,000, the lowest level in 15 years.

The headline figure was down 40 per cent on this time last year, although the stock available for sale in Dublin had fallen by less than the national average, it said.

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"There is no precedent for availability this tight in the post-Celtic Tiger housing market," Trinity College Dublin economist and the report's author, Ronan Lyons, said.

“And measuring availability before 2007 is complicated because, until then, a substantial fraction of homes bought and sold did so offline,” he said.

The report, which covers the first three months of 2021, found house prices were on average 7.6 per cent up in year-on-year terms. In Dublin, the increase was 6.9 per cent.

The report said the average sales price nationally was €275,751, up from €256,000 a year ago. In Dublin, the average asking price was €398,127.

This marks the second quarter in a row where prices are nearly 8 per cent higher than a year previously.

‘Importance of supply’

“The figures in this latest Daft.ie report confirm that the impact of Covid-19 on the sale market was a massive shock to supply, with seemingly far less impact on demand,” Mr Lyons said.

“The total number of homes listed for sale in the 12 months to February nationwide was just 45,700, down a third on the previous 12-month period. This sudden collapse in supply – at a time when demand has held up remarkably well – has converted into sharp upward pressure on prices,” he said.

“It highlights the importance of supply in determining market outcomes and is a reminder that, even when the pandemic subsides, the need for a substantial volume of new homes to be built each year will remain,” he added.

Listed prices rose in all but one of the 54 markets contained in the Daft.ie report – prices in Galway county fell – although there were significant differences across the country in the rate of inflation.

In all urban markets outside Dublin, price rises were up 10 per cent year on year and this was also true across 10 counties of Leinster, excluding Dublin and Meath.

Elsewhere, price increases were more modest, with increases of 2-3 per cent in Clare, Kerry and Cork county and even smaller gains in Sligo and Leitrim

Despite predictions that the pandemic would trigger a fall in property values, the opposite has occurred.

Commenting on the report, the Institute of Professional Auctioneers and Valuers (IPAV), said the increase in prices was unsurprising given the huge drop in availability of listed properties year on year.

Chief executive Pat Davitt said many agents were not listing new properties to the market on property portals because of the severity of the Covid-19 restrictions on showing properties.

“We have sought an easement from the Government on one aspect – to allow agents to show properties, under strict health and safety protocols of course, to potential buyers who can confirm they have the necessary funds in place to purchase,” he said.