Surveyors predict house prices in Munster will rise 7% over the next 12 months

Warning about acute shortages of places to live, the profession is appealing to Government to borrow and invest in housebuilding

Chartered surveyors say that Ireland needs 400,000 new homes to be built over the next decade. Picture: Mark Stedman

House prices in Munster will rise 7% in the next 12 months, slightly higher than the State-wide average, but almost double the 4% increase in Dublin, according to an authoritative survey of estate agents by surveyors. 

The Society of Chartered Surveyors Ireland also said that a 7% hike on a home costing €200,000 in Munster will mean a buyer will pay €14,000 more, while a 4% rise on a €400,000 home in Dublin will be €16,000 more expensive.  

The surveyors said that the acute shortages will now require 400,000 of all types of social and private new homes to be built over the next 10 years to meet demand — significantly more than other leading estimates. 

Previous estimates have assumed that up to 35,000 new housing units are needed on an annual basis over multiple years to meet supply constraints, a wealthier economy and rising population. The latest forecast compares with only 20,000 units that were built amid the Covid disruptions last year. 

Material prices will add to costs

The chartered surveyors also warned that global material prices would add to the costs of building new homes, and gave their backing to the ESRI proposal for the Government to borrow heavily and invest in housebuilding.    

Some forecasters say price increases could be hefty this year. Leading mortgage broker Michael Dowling said that activity in the housing market was “on fire” this summer. He said sale prices are being agreed at 10% above asking prices, while mortgage applications were on the rise. Mr Dowling projects the new mortgage market will be worth €10bn this year, up from €8.3bn during the worst of the Covid crisis last year. 

First-time buyers makes up 50% of market

First-time buyers account for more than 50% of the market, but a significant share of the market is made up of people trading up, and the rest accounted for by switchers who are seeking out the best rates.

The latest Ulster Bank construction survey showed house building continued to expand in June from May, while other parts of construction also expanded. "Housing continued to lead the expansion, while rates of growth in commercial and civil engineering activity accelerated marginally," the survey found.