Irish housing prices rose by an average of 7.7 per cent in 2021, according to the latest sales report from property website Daft.ie.
The average price nationwide in the final quarter of 2021 was €290,998, up 0.6 per cent on the third quarter of 2021 and just 21 per cent below the Celtic Tiger-era peak, it said.
While 2020 saw similar rates of inflation across the Irish housing market, significant regional differences emerged during 2021, Daft noted, with the smallest increases seen in urban areas.
In Galway city, prices rose by 1.6 per cent during the year to €322,543, while in Dublin, prices rose by 3.4 per cent to an average of €405,259. In Cork city, prices rose by 5.5 per cent to €313,436, while in Limerick and Waterford cities, the increases were 6.4 per cent to €234,908 and 7.5 per cent to €211,023 respectively.
Outside the five main cities, however, prices rose by an average of 11.5 per cent during 2021. The increase in Munster (outside the cities) was 9.2 per cent, while in Leinster (excluding Dublin), prices rose by 11.9 per cent.
The largest increase in prices in the country was seen in Connacht-Ulster, where prices rose by 14.6 per cent during 2021.
Fewer than 11,500 homes were listed for sale on Daft.ie on December 1st, the lowest total recorded since July 2006, when online advertising was still emerging. This represents a year-on-year fall of one quarter.
The total number of ads of properties for sale in the year to December 1st was just over 54,000, the highest 12-month total since early 2020. While supply has improved, it remains well-below pre-pandemic levels, with almost 70,000 homes listed for sale during 2019.
"Inflation in listed prices continues to cool from its mid-year peak. Nonetheless, at nearly 8 per cent for the year, it remains stubbornly high," said Ronan Lyons, economist at Trinity College Dublin and the report's author.
“This reflects a combination of unusually strong demand and on-going weak supply. Demand for homes to buy, which had been strong anyway from the mid-2010s, has received an unexpected boost during the Covid-19 pandemic, with prospective buyers able to tap into ‘accidental’ savings, as expenditure fell during the lockdowns.”
Meanwhile, the supply of both new and second-hand homes remained weaker than had been expected before the pandemic, he added.
“While the pandemic has changed some particulars, the general health of the housing market is largely unchanged – it is one characterised by weak supply in the face of strong demand. For that reason, additional supply – not just of homes for sale but also of market and social rental housing – remains key to solving Ireland’s chronic housing shortage.”
Responding to the report, the Institute of Professional Auctioneers and Valuers (Ipav) said the drop in supply of homes on the market might not be as dramatic as the Daft figures indicate.
"Agents are reporting in the back end of the year more stock has come on the market, which is stemming house price inflation in the latter quarter of the year from the highs of the summer period," said Ipav chief executive Pat Davitt.
“They are also reporting that many vendors no longer want to market their properties on portals. There is less need to because agents have eager mortgage-approved and cash buyers on their books for properties that come to market.”