Furthermore, surveyors predict prices will rise by a further 3.6% in second half of the year. This would lead to a total estimated increase of 6.2% over the year, on top of a 6.3% increase in 2016. It is a continuation of an upward trend that has been in evidence since 2011. Construction costs have an obvious knock-on effect on new home prices. The report estimates that the current rises will bring average house prices countrywide back to levels last experienced in 2004. As expected the highest rise is in the Greater Dublin Area (GDA).
The society has already warned that, failing the government entertaining “a range of radical and potentially unpalatable policies”, it is likely that Ireland will not meet the demand of 35,000 homes required to satisfy current housing market demand until 2026. One of the policies it has suggested, is reducing the VAT rate – a measure which would obviously be resisted by the exchequer. The government has committed to building 3,000 new social housing units by 2018, but given supply constraints SCSI are witnessing on the ground, it cannot see how these will be delivered.
Chairman of SCSI, Kevin James, says: “The increased level of construction activity is leading to a shortage of resources across multiple trades for both main contractors and specialist sub-contractors while exchange rate fluctuations between the Euro and Sterling due to Brexit have also increased the cost of some materials. Looking ahead the increasing pressure for wage increases in the industry will also drive tender prices higher.” In a separate report into national house prices by REA, it has found that central city prices in Cork and Waterford have remained largely static since June, but are gaining markedly in the commuter belt. Limerick city has shown growth of 2.7% over the quarter.
REA Celtic Properties also claims Brexit is having an unusual effect on the rental market in West Cork. Former Sterling buyers are now opting to rent on a long-term basis, creating added pressure on an under-supplied market.