Irish house prices forecast to rise by 4% as supply struggles to meet demand

Irish residential property prices, which remained resilient during the Covid-19 shock last year, are set to rise by an average of 4 per cent in 2021 as supply shortages continue to prop up valuations, according to a survey of chartered surveyors.

The Society of Chartered Surveyors Ireland (SCSI) found that two-thirds of 250 chartered agents surveyed in December expect property prices to increase this year, ranging from a 3 per cent advance in Dublin to 6 per cent growth across Connacht and Ulster.

While more than three-quarters of SCSI agents were predicting property value drops in the first quarter of last year as Covid-19 started to sweep across the State, this fell to just 8 per cent in the December poll.

Experts – spanning economists to banking executives – had estimated at the height of the coronavirus crisis last May that property values would decline by as much as 12 per cent 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, as ongoing supply shortages were compounded as construction came to a standstill during the spring lockdown.

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“2020 was dominated by Covid-19 and this led to a stop, start, surge property market which only began to taper towards the end of the year. Agents believe Covid-19 will once again dictate activity levels in 2021 and, given the recent introduction of new restrictions, it’s very possible we could see a repeat of that stop, start, surge pattern in 2021,” said TJ Cronin, vice-president of the SCSI.

Lockdown period

While much of the market activity was halted or significantly slowed in the first half of the year due to an extended lockdown period and the temporary closure of the construction industry, the second half saw a significant increase in buyer and seller activity, SCSI noted.

Residential property values, including houses and apartments, decreased by just 0.4 per cent nationally in the year to October, according to the latest figures from the Central Statistics Office. Meanwhile, asking prices for houses surged 6 per cent in the Republic last year, property website MyHome.ie, which is owned by the publisher of The Irish Times, said in a report earlier this month that warned "too much cash is chasing too few homes".

Mr Cronin said the overnight shift to people working from home last year "has led to a reordering of priorities and is driving interest in larger properties in regional locations with good broadband and lots of amenities as well as holiday homes in secondary locations".

This has driven an expectation among surveyors that Dublin will see the lowest rate of price growth this year, while Connacht and Ulster are forecast to see the highest.

“While Covid-19 has badly affected certain sectors, it has enabled prospective buyers who work in areas which haven’t been hugely impacted, such as pharma, tech, financial and the public sector, to increase their savings,” he said.