S&P: Irish house prices to fall next year and then rise strongly after Covid-19 crisis

Prices set to be among fastest rising in Europe

Irish house prices could fall next year as Covid-19 supports for the economy come to an end but could then be among the fastest rising in Europe in the following two years as demand for housing continues to outstrip supply, according to a report by S&P Global Ratings. 

Prices here will fall by 1.6% this year and by 1.1% in 2021 and then rise sharply by 4.6% and 4.2% in 2022 and 2023, S&P forecast in its pan-European outlook on house prices.

Its report, the Pandemic won’t derail European housing price rises, says that household debts across Europe are lower than at the time of the global financial crisis, while savings have risen during the pandemic. 

There is little evidence at this stage that European house purchasers are looking beyond the cities to buy in rural areas after the pandemic lockdowns, according to the research.         

“We expect housing prices to rise most in The Netherlands (6.1%), Germany (4.6%), and Sweden (3%) in 2020 year-on-year, while only Ireland, Spain, and Portugal could see small price declines. We expect prices to rise also in Belgium, France, Italy, Switzerland, and the UK,” it said.

For the UK, S&P sees house prices rising 1.6% this year, but falling by 1.9% in 2021, and then rising by 3.7% and 4.1% in the following two years.

Reflecting the resilience of its economy, German house prices will rise this year or in 2021, and will grow strongly in 2022 and 2023, according to S&P.

The report predicts the high level of savings households built up during the worst of the lockdown months and the disruption caused to house building will help support prices.

Supply tumbled by around a third in the eurozone during the European lockdowns in the second quarter, although the UK and Germany maintained output by not closing their building sites.

Prices are still climbing, despite it all.

“Accumulated pent-up demand for homes, the need for home space, resilient household creditworthiness, and low financing costs all contributed to a fast recovery of transactions and a dynamic property market in the latter part of the year," S&P said.

“The return to pre-pandemic levels of activity in 2022, and potential structural changes in housing demand post-Covid-19, should lead to a renewed acceleration in housing demand and prices,” it said.