House price growth accelerates to 3.7% as Covid heats up market

House prices grew by 3.7 per cent year on year in March – the fastest rate of growth recorded in two years – while property-related transactions jumped by 23 per cent.

The latest official figures show the market is continuing to experience a mini-boom brought on by Covid-19.

Prices in Dublin, where supply pressures are most acute, rose by 2.5 per cent over the 12-month period to the end of March while prices outside Dublin rose by 4.9 per cent.

At the outset of the pandemic, many had predicted property values would decline but a number of factors – increased savings, remote working, and ex-pats returning from London after Brexit – have triggered a pick-up in prices.

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The hiatus in construction and the knock on impact on supply has also been cited as a factor.

The latest Residential Property Price index from the Central Statistics Office found the number of property transactions in March rose month on month by 23 per cent to 3,951, and was nearly 10 per cent up on March last year. The total value of transactions filed with Revenue in March was €1.2 billion.

Existing dwellings accounted for 86 per cent of the homes purchased, while the balance of 13.7 per cent were new dwellings. The number of new homes purchased fell by 17.5 per cent compared to March 2020, reflecting the slowdown in construction caused by restrictions.

The figures show households paid a median or middle-range price of €262,500 for a home in the Republic over the past year. The Dublin region had the highest median price at €390,000.

Highest median

Within Dublin, Dún Laoghaire-Rathdown had the highest median price (€540,000), while south Dublin had the lowest (€358,000). The highest median prices outside Dublin were in Wicklow (€358,000) and Kildare (€325,000), while the lowest price was €113,750 in Longford.

"Prices have risen steadily, and it would not be surprising to see an acceleration in price increases over the coming months, as restrictions lift around property viewings," said Trevor Grant, chairman of the Association of Irish Mortgage Advisors.

“There is a glut of homeseekers, particularly first-time buyers,” he said.

“Demand for property has been robust throughout the pandemic, and the number of first-time-buyers looking to own their own homes is at its highest in years,” Mr Grant said.

“However, the stock of properties available for sale fell by approximately 40 per cent over the past 12 months. This is a direct consequence of many homeowners being reluctant to sell in the middle of a pandemic, the restrictions on house viewings and new supply being frozen by restrictions on new building projects,” he said.