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House asking prices surge 6% as market shrugs off coronavirus impact

MyHome.ie report puts average asking price nationally at €284,000

The report also noted that mortgage lending had hit a ‘new cycle high’ of €1.1bn in October. Photograph: Tim Ireland/PA Wire

House prices surged 6 per cent last year, the fastest pace of growth recorded in almost three years, according to a report by property website MyHome.ie, which warned that “too much cash is chasing too few homes”.

Experts had expected property values to decline in 2020 in the face of mass unemployment and a hiatus in economic activity brought about by the pandemic.

However, the market has defied expectations with prices strengthening and mortgage lending increasing.

MyHome.ie’s latest report, compiled in conjunction with Davy Stockbrokers, found that annual asking price inflation nationally rose 6.3 per cent in the fourth quarter of last year and 4.8 per cent in Dublin.

This lifted the average asking price for a house in the State to €284,000. In Dublin, which has the biggest supply shortages, the average asking price was put at €392,000, while outside Dublin it was €238,000.

“This trend confounds warnings made early in 2020 that Ireland’s housing market could suffer double-digit price declines,” the report stated.

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The acceleration in prices was put down to several factors, including the fact that many prospective home buyers were insulated from the Covid-19-related job losses.

The report also highlighted that Government supports had protected incomes, removing the risk of forced selling, while housing supply issues had become “more acute”.

It also noted that mortgage lending had hit a “new cycle high” of €1.1 billion in October.

MyHome.ie, which is owned by The Irish Times, bases its findings on newly listed properties, which it says are the most reliable indicator of future price trends.

Increases ‘likely’

The report’s author, Davy chief economist Conall Mac Coille, said that house price increases were now likely in 2021.

“This quarter’s MyHome report points to an acceleration in annual asking price inflation to 6 per cent, the fastest pace in almost three years,” he said.

“This pressure has not yet turned up in transaction prices, although the Central Statistics Office’s Residential Property Price Index rose by 0.5 per cent in October, the sharpest monthly increase in over one year. It is probably only a matter of time before the official measure of house price inflation accelerates.

“As we head into 2021, home buyers have saved additional funds to purchase homes, with sentiment helped by the likely recovery in the economy as vaccines are disbursed,” Mr Mac Coille said. “Given that home-building will remain impaired, with banks seeking lending opportunities, too much cash is chasing too few homes – which can only push prices higher.”

The pandemic has triggered a savings surge, with households putting an additional €12.6 billion into bank and credit union accounts. Part of this is expected to flow back into property-related transactions.

Angela Keegan, managing director of MyHome.ie, said: “The property market mirrors the overall economy, and we are in a much better place now than we may have expected to be early in 2020 when the virus emerged.

“Government Covid-19 supports, increased mortgage lending and the concentration of job losses among mostly lower-paid workers have ensured the property market has remained buoyant, while the ongoing issue of supply has exacerbated demand leading to a rise in house price inflation.”

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