Munster house prices expected to increase by 5% this year

Increase in home working and lack of overall housing supply driving up prices

Housing supply may not fully meet demand levels until 2031.

Munster house prices are expected to rise by 5% this year, with Cork, alone, seeing a similar increase.

Estate agents surveyed by the Society of Chartered Surveyors Ireland (SCSI) expect nationwide residential property prices to rise by an average of 4% in 2021.

CSO figures, over recent months, have shown annualised declines in house prices but the rate of decline has been steadily slowing.

Complex legislation is causing people to leave the rental market, while an increase in home working since the start of the Covid crisis and a lack of overall housing supply are driving a rise in buyer interest and selling prices, the SCSI said.

“We can see that the transition to working from home 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,” said SCSI vice-president TJ Cronin.

“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. 

"We’ve also seen a big inflow of Irish people returning from abroad, to Dublin in particular, and this has underpinned prices at the upper end of the market. 

In a situation where you have very limited supply, the fear of missing out on a property will very often trump the fear of paying over the odds.

Mr Cronin said the property market has largely weathered the Covid storm, but wider issues that existed before the outbreak of the pandemic have not gone away; one being supply.

New house completions are not expected to return to 2019 levels until 2024. But, the SCSI feels housing supply and demand equilibrium may not fully be achieved until 2031.

By that stage it is predicted the sector will need to be building in excess of 60,000 units per annum, over three times the current output.

“Many of the people who have been worse affected from an economic perspective by the pandemic are very often excluded from the property market on affordability grounds. That is an indictment of the failed housing policies of the past," Mr Cronin said.

The society has called on the Government to embark on a major house building programme so as to ensure the needs of our growing population are met and that we have a sustainable property market for the future.

He said 62% of the agents who are predicting prices will rise this year are doing so because of the lack of supply of new and second-hand homes. Only 33%, by comparison, say it will be because of economic performance and the impact of Covid.

The SCSI survey predicts house prices in Leinster will increase by 4% this year. Prices in Connacht and Ulster — a combined region with some of the lowest prices in the country — will increase by 6% and Dublin property prices, traditionally the highest in the country, are set to rise by 3%.

“Last year 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 Mr Cronin.