House prices to climb 12.5% this year 'despite rapid increase in new homes'
Goodbody expects that 31,000 homes will be built in 2023.
House prices will climb 12.5% this year and by 5% in 2022, despite a rapid increase in house-building activity, Goodbody chief economist Dermot O'Leary has predicted.
In new forecasts, Mr O'Leary has increased his home projections and sees 27,000 units being completed in 2022, up from an earlier forecast of 23,000 units.
For 2023, he projects for the first time that 31,000 homes will be completed.
However, Mr O'Leary said that a significant number of new apartments and public housing will be built. That means that the price pressures will continue on the wider private housing market.
Following the 12.5% and 5% price increases, respectively, this year and in 2022, house prices will rise 4% in 2023, predicts Mr O'Leary.
Many economists predict that housing shortages will last for a number of years and experts say the market needs around 35,000 new homes a year to start meeting demand from a growing population and economic growth in the State.
The Central Bank has estimated that 15,000 fewer homes will have been built because of the fallout from the pandemic over the past two years.
"On the back of the surge in commencements, we are increasing our home completions forecast to 27,000 for 2022 and publishing our 2023 forecast for the first time, where we expect 31,000 completions," said Mr O'Leary.
"While there are clear cost pressures in the sector due to labour and materials, demand conditions remain strong, home prices continue to rise, and government policy is supportive through homeowner supports and increased public housing output."
Demand remains strong and "a surge in mortgage approvals and a structural shift in geographical demand" are helping to push prices higher.
Mr O'Leary predicts mortgage lending will increase to €11.8bn in 2022 and then to €13bn in 2023.
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