The Housing Minister has said that he hopes that 2022 will deliver a slowdown in the increase in Irish property prices.
Darragh O’Brien, speaking in Donabate in Co Dublin on Monday, insisted that the Government’s housing strategy would be able to increase supply to sufficiently arrest an increase in property prices across the country.
A new survey, published on Monday, found that the race for remote working space and the urban flight from cities was driving a huge rise in property prices outside major cities.
Average house prices have risen by 3,500 euro per month since the end of June, with selling prices in commuter areas and small towns increasing by more than double the growth experienced in major cities.
Asked by reporters when he expected the rise in house prices to slow, Mr O’Brien said: “I hope to see this level off and we’re seeing some slowdown in the acceleration of house price increases already.”
He said it was “too soon” to say when price increases would reach a peak, but said: “Supply will increase substantially next year and I hope we would see a requisite tapering off of the level of increases that we’re seeing.”
Mr O’Brien said it was clear the Covid-19 pandemic had had an impact on the Irish housing market.
“There is no doubt that the restricted market that we have there and restricted supply, particularly over the last two years with Covid, has had a real impact.
“What we need to see is more supply, frankly. And the indicators for next year are good. They’re good in the sense we’re seeing housing commencements increase quite substantially over the last couple of months.
“I believe the response to demand, but also the response to the Government’s plan in Housing for All, will lead to significant increases in commencements. There is no doubt that it is very trying at the moment.”
He insisted that the problem was not just being felt in Ireland, but across Europe and parts of the US.
A massive demand for properties outside the capital has seen unexpected quarterly rises in towns such as Nenagh, Tipperary, where scarcity of supply and bidding wars seen three-bed semis sold at 23% above their recent value – an increase of 45,000 euro.
The REA Average House Price Survey concentrates on the sale price of Ireland’s typical stock home, the three-bed semi, giving a picture of the second-hand property market in towns and cities countrywide.
The price of a three-bedroomed semi-detached house across the country rose by 4.1% over the past three months to 264,056 euro, representing an annual increase of 12%.
The biggest rises in quarter three came in commuter counties and the country’s large towns as buyers continue to move further from the capital in anticipation of long-term remote and hybrid working.
There has also been a surge of interest from ex-pats anxious to return to Ireland after the pandemic.
Mr O’Brien said: “Thankfully people, moving into the regions, being able to find that they’re able to work in the regions and that everything isn’t just Dublin centric or east coast centric – that’s a good thing.
“But we’re seeing with that as well because of restricted supply, some increases there outside of Dublin that we would not have seen before, but from a lower base. That’s why one of the main things within our plan is to try to drive affordability in through the sector.”
The rural and commuter area increases are double those being experienced in Ireland’s major cities, with Dublin increasing by 2.3% to 467,000 euro and Cork Limerick and Galway by an average of 2.4% to 281,750 euro.
REA spokesman Barry McDonald said: “The survey’s average of four weeks to sell should be even lower because, while bidding is fast and furious, vendors are not rushing to accept offers.
“With an exceptional shortage of stock, demand is being fuelled by an increase in mortgage-approved buyers on the market.
“The rural flight, which began during lockdown, shows no signs of letting up, even in the face of a return to office working.
“In Stoneybatter, REA Fitzgerald Chambers report that all sales in the quarter were for vendors who are moving out of Dublin to locations around the country.
“The effect of this is being felt nationwide with counties such as Tipperary (9.2%), Donegal (8.4%) and Kilkenny (7.3%) all experiencing sharp rises in Q3 as buyers seek value locations.
“In Nenagh, REA Eoin Dillon has reported that three-bed semis that previously fetched 190,000 euro have sold for 235,000 euro, such is the scarcity of supply.
“Our agent in Roscommon REA, Seamus Carthy, reported that 75% of sales in the last quarter were family homes for people who are returning to the county from cities.
“In my own suburban area of Lucan, we are seeing a combination of people selling to move further afield and buyers moving out from the city centre because they feel they don’t need to be in walking distance of the office any more.”
Three-bed semis in commuter counties rose 4.6% by over 12,500 euro in the past three months to an average of 282,500 euro, with the average home selling in just three weeks.
As the flight to rural locations continues, prices in the rest of the country’s towns rose by over 4.9% in third quarter to 185,379 euro.
Michael Boyd of REA Boyd’s, Kilkenny city, said “There is a surge of interest from buyers in Dublin and ex-pats wanting to come home.”
He said that average prices in Kilkenny have risen by 17,000 euro to 275,000 euro and properties are now moving in two weeks.
“We saw 90 mortgage-approved applications to view one property in three days,” he added. “The reserve was 200,000 euro and it sold for 280,000 euro at an online auction on Bidnow.ie.”Internet Explorer Channel Network