While property prices recorded double digit growth in 2021 - and are expected to continue to rise in 2022 - the median rate of increase nationally is expected to moderate to five percent this year according to the Society of Chartered Surveyors Ireland.
According to the findings, nine out of 10 agents (89% ) expect property prices to increase over the coming 12 months, nine percent expect prices to remain the same while just two percent expect a decrease. Last year the respective figures were 68%, 24% and 8%.
SCSI estate agents believe property prices in Westmeath, the rest of Leinster and Munster are set for a median increase of five percent while Connacht Ulster will see an increase of seven percent.
The vast majority (80% ) of agents who expect prices to rise believe it is due to market factors, ie, the lack of supply of new and existing homes, 13% attribute it to economic factors while just four percent believe the Central Bank of Ireland’s macro prudential rules are the key driver.
This year’s SCSI annual Residential and Outlook report – which has been running since 1983 - is based on three surveys of 580 members conducted over the last 12 months.
The President of the SCSI, TJ Cronin, said 2021 was the year when the lack of supply and Covid combined to totally distort the property market, pushing up demand and inhibiting the supply of new homes.
According to the CSO the median price of a home nationally is €275,000. A five percent increase in this instance would translate to an increase of €13,750 while a seven percent increase would equate to an increase of €19,250. The median price of a home in Dublin is €400,000, so a five percent increase here means an increase of €20,000.
New planning system must address costly delays
With residential property completions only due to hit the 30,000 mark in 2023 – the SCSI estimates the country needs to be building 40,000 units per annum to meet demand – Cronin said driving down the costs of new, well designed sustainable homes would be critical to the success of the Government’s Housing for All plan.
Cronin pointed out that previous research carried out by the SCSI found that a delay of a year to an average apartment development caused by judicial reviews (JRs ) can add at least €8,000 to €12,000 to the cost of each new unit.
The Rental Market
Some 79% of agents surveyed believe that rental prices will increase over the next 12 months, while a further 17% expect prices to remain the same; only three percent anticipate a decrease in rental prices.
Of the agents who expect to see prices increase, 74% expect they will rise by between 0-5%, 24% expect them to increase by 5-10% while two percent expect them to rise by 11-15%.
According to the RTB the national standardised average rent in Q3 2021 was €1,400.
TJ Cronin said a chronic lack of supply, similar to the sales market, was also the critical factor affecting the rental market, with the continued departure of small and medium sized landlords a worrying trend.
Consumer Trends
Agents surveyed said that due to Covid and the increase in people working from home, the demand for larger properties in rural locations with good broadband remains strong. There was also anecdotal evidence that demand is growing for one-off properties, especially those located in coastal locations. Some agents said prices for such properties increased by up to 20% last year.
The rising price of building materials and labour has had an impact on those seeking to renovate homes. Agents say that while demand in the second-hand market remains brisk, some prices on derelict properties or those requiring substantial investment have not risen as much as expected due to the sharp rise in construction inflation.
According to the report, Covid has led to an increase in the use of technology by agents in the viewing and sale of property, which increases transparency and makes for more efficient transactions. Some 73% of agents have made significant investment or are considering such investment in digital technologies to aid the property sales process.
