Consumer confidence is at its highest in two years despite the majority of householders expecting property prices and rents to rise further in the next year, writes Pádraig Hoare.
The Bank of Ireland’s latest economic pulse says that the majority of Dublin households expect house prices and rents to increase in the next year, with the same going for households outside of the capital.
Bank of Ireland group chief economist Loretta O’Sullivan said: “National house price inflation picked up during 2017 and was running at 11.6% year-on-year in November. Price rises are being driven by fundamental factors like population growth and rising employment and incomes. The lack of supply is also an issue, though housebuilding activity is increasing. The pace is just not fast enough to meet demand, which will put upward pressure on prices again this year.”
The report said the rental market is also under pressure, with rents now well above their previous peak.
Despite worries around rising house prices and rents, consumer confidence is now at a two-year high, while business sentiment is up on last month, Bank of Ireland said.
“Data published by the CSO and the Department of Finance in recent weeks show that the economy is doing well and that the public finances remain on track. January also saw the changes to social welfare payments and income taxes announced in Budget 2018 come into effect and while Brexit worries haven’t gone away, they took more of a back seat this month as attention turned to a possible transition period,” Ms O’Sullivan said.
Firms in all sectors upgraded their near-term expectations for business activity this month, with those in industry, services and construction also more positive about employment prospects, the report said.
About 44% of businesses are planning basic wage rises in the coming year, up from 37% this time last year. Just under half of workers are expecting a pay rise.
The Economic Pulse surveys are conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and over 2,000 businesses on topics including the economy and spending.