'Too much cash chasing too few homes': House price inflation surges to more than 6%

Prices in Cork city are up 4% and in Waterford city they increased by 14%. File Picture: iStock

House price inflation across the country jumped more than 6% to its fastest in three years, with Cork city seeing a 4% rise in prices, and Waterford city a whopping 14%, in the fourth quarter of the pandemic-hit 2020.

A new report by MyHome.ie, in association with analysts Davy, put paid to the widely-prevailing notion that the Covid-19 pandemic could see prices plummet as industry ground to a halt and workers furloughed.

There are now just 13,900 homes listed for sale on MyHome, down 28% on the year — a record low, Davy chief economist Conall MacCoille said.

MyHome said annual asking price inflation rose by 6.3% nationwide, by 4.8% in Dublin and by 7.2% elsewhere around the country.

It was largely due to prospective home-buyers being largely insulated from job losses, bolstered by government supports to protect incomes, which led to the risk of forced selling dissipating.

Mortgage lending hit a new cycle high of €1.1bn in October, while housing supply issues have become more acute, the report said.

House prices in Munster

In Munster, Cork median prices were up 2% to €250,000, while in Cork city itself, prices saw an even sharper jump, up 4% to €260,000. 

The median price is different to an average price in that it is measured as the price in the exact centre of a data set, meaning it is calculated as exactly half of the houses priced for less and half priced for more.

The median price in Clare was up by 10% to €219,000 and by 11% in Kerry to €205,000, MyHome said. 

Prices in Limerick city were flat at €195,000, rising just 0.5% when combined with the county. Tipperary and Waterford were both up 2.9% to €175,000 and €180,000 respectively. 

However, Waterford city saw a 14% rise to €159,000. 

For four-bedroom detached homes in Cork, prices were up 8.5% to €320,000 and 17% in Galway to €288,000. Carlow (21%), Kerry (13%) and Mayo (19%) were the other counties that saw double-digit gains, the MyHome report said.

Mr MacCoille said Covid-19 has tightened Ireland’s housing market considerably. 

"As we head into 2021, homebuyers have saved additional funds to purchase homes, with sentiment helped by the likely recovery in the economy as vaccines are disbursed. 

Given that homebuilding will remain impaired, with banks seeking lending opportunities, too much cash is chasing too few homes — which can only push prices higher

Managing director of MyHome.ie, Angela Keegan, said the country and property market is in a much better place now than may have been expected to be early in 2020 when the virus emerged.

With lower-paid workers taking the brunt of job losses, the property market has remained buoyant with those more likely to buy retaining work, Ms Keegan added.