House-price inflation is expected to remain at double-digit levels for much of 2022 as the mismatch between what is for sale and what buyers want continues.
Two new reports on the housing market paint a picture of a sector under strain due to a lack of supply and increased demand driven by Covid-related factors such as remote working.
The two quarterly reports, one each from rival property websites myhome.ie and daft.ie, suggest asking prices accelerated again in the first quarter of 2022 as the stock of homes available for sale slumped to a new record low.
Myhome, which is owned by The Irish Times, said annual asking-price inflation was now running at 12.3 per cent.
This put the median or typical asking price for a home nationally at €295,000, and at €385,000 in Dublin.
MyHome said the number of available properties for sale on its website fell to a record low of 11,200 in March, down from a pre-pandemic level of 19,000. The squeeze on supply, it said, was most acute outside Dublin, with the number of properties listed for sale down almost 50 per cent compared with pre-pandemic levels.
It said impaired supply and robust demand meant double-digit inflation is likely until at least mid-2022.
"Housing market conditions have continued to tighten," said author of the myhome report, Davy chief economist Conall Mac Coille.
“The broad picture of the market in early 2022 remains similar to last year: impaired supply coupled with robust demand due to Ireland’s strong labour market,” he said.
“One chink of light is that new instructions to sell of 7,500 in the first 11 weeks of 2022 are well up from 4,800 in 2021, albeit still below the 9,250 in 2019. The flow of new properties therefore remains impaired,” said Mr Mac Coille.
“Whatever new supply is emerging is being met by more than ample demand. Hence, transaction volumes in January and February were up 13 per cent on the year but pushed the market into ever tighter territory,” he said.
He said Davy was now predicting property-price inflation to average 7 per cent this year, up from a previous forecast of 4.5 per cent, buoyed strong employment growth.
Daft, meanwhile, said house asking prices indicated the average listed price nationwide in the first quarter of 2022 was €299,093, up 8.4 per cent on the same period in 2021 and and just 19 per cent below the Celtic Tiger peak, while noting increases remain smaller in urban areas, compared to rural.
Just 10,000 homes were listed for sale on its website as of March 1st, an all-time low. In Dublin, Cork and Galway cities, prices in the first quarter of 2022 were roughly 4 per cent higher on average than a year previously, while in Limerick and Waterford cities the increases were 7.6 per cent and 9.3 per cent respectively.
The report's author, Trinity College Dublin economist Ronan Lyons, said: "Inflation in housing prices remains stubbornly high – with Covid-19 disturbing an equilibrium of sorts that had emerged, with prices largely stable in 2019 but increasing since.
“As has been the case consistently over the last decade, increasing prices – initially in Dublin and then elsewhere – reflect a combination of strong demand and very weak supply.”