House prices ‘very close’ to Celtic Tiger levels after 12% rise, report says

Property prices are now “very close” to Celtic Tiger levels after rising about 12 per cent last year, and the spectre of rising inflation could force many young buyers out of the market, according to a new report.

The latest Residential Property Price Barometer from the Institute of Professional Auctioneers and Valuers (IPAV) charts prices achieved for three and four bedroom semi-detached homes and two-bedroom apartments in the second half of 2021.

IPAV chief executive Pat Davitt said the report outlines how market conditions are freezing many young buyers out of the picture. "We are now very close to 2006/7 levels of house prices," he said. "However, we are in a very different market.

“At that time there was no shortage of supply, we were building 93,000 units per year. There was excessive lending with banks often approving several prospective buyers for the same property. They ended up competing against each other, thereby pushing up prices.

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“Many properties are being purchased from savings and parents are contributing hugely to deposits for young buyers. With scarcity of supply, the current market favours those on higher incomes and those fortunate enough to have family support.

“There is a real danger that unless these issues can be dealt with without further delay, the storm clouds of rising inflation could scupper many prospective buyers.”

The report shows house prices increased by 6 per cent in the second half of the year to bring the average overall price to €294,623 compared with the previous six months.

The figures were boosted by the double digit price growth in a few areas, notably Wexford where four bed semi prices soared as much as 14.4 per cent and three bed semis rose 13 per cent.

However, a four bedroom house in Wexford is still only about one fifth the price for a four bed semi in Dublin 4.

Double-digit price growth in the four bedroom sector was also observed in Donegal, Meath, Monaghan, Sligo and Westmeath. In the three bedroom sector it was also seen in Clare, Cavan, Donegal, Louth and Mayo.

However in the three bedroom sector, nine markets showed price growth of less than 3 per cent, with eight of those in Dublin with the other being in Cork City.

Among four beds, prices grew 12.7 per cent in Donegal to €206,667. Monaghan saw growth of 11.7 per cent to €238,334, while similar growth of 11.3 per cent was seen in Sligo to €222,500, and Meath where prices rose 11.2 per cent to €360,000.

Nevertheless, in price terms alone, Dublin 4 is still the most expensive place for four bedroom semis after a 4.2 per cent rise to €1.25 million.

Neighbouring Dublin 6 saw a 3.4 per cent rise to €975,000, while Dublin 2 saw rises of 4.9 per cent to €860,000. Dublin 3, which includes Clontarf, is fourth most expensive after a 5 per cent rise to €735,000.

The slowest price growth was seen in Dublin 12, which includes Perrystown and Walkinstown, where prices rose by only 0.88 per cent to €570,000. The second slowest price growth was seen in Roscommon – up 2.1 per cent to €180,000.

In terms of three bedroom semis, Clare had the strongest growth rising 13.5 per cent to an average of €206,250. It was closely followed by Mayo and Wexford which both grew 13 per cent.

Price growth for three bedroom semis was below 6 per cent in most areas of the capital. Dublin 4 showed the slowest price growth of only 1.4 per cent but nevertheless it remained the most expensive market for three bedrooms at an average of €900,000.

The recovery in the provincial apartment market which was seen in commuter belt markets in 2020 gathered momentum in 2021, not alone in terms of strong price growth in the wider commuter belt but also in the spread of price growth to the less populous counties.

Counties Westmeath, Laois, Meath and Wexford are examples of how demand for apartments has spread to the wider commuter belt. The strongest price growth was seen in Westmeath where two bedroom apartments rose 11.9 per cent to €156,667.