According to the latest residential market review and outlook from leading property advisors DNG, house prices are set to continue rising this year, following the strong growth in values recorded in 2021. At a national level (excluding Dublin ) the DNG National Price Gauge (NPG ) recorded an increase in the average price of a second hand home of 13.6 per cent last year, a marked acceleration in the rate of inflation compared to 2020 when prices rose by 1.4 per cent. At the national level (including Dublin ) the overall rate of price increase last year stood at 12.0 per cent. The NPG, which tracks house prices across the country on a half yearly basis, recorded growth of 5.3 per cent in the six months to December 2021, compared to an increase of 7.9 per cent in the first six months of last year.
All regions of Ireland recorded double digit price growth in 2021, except for Dublin (+9.9 per cent ). Nationally, the strongest rate of house price appreciation was in the mid west region (+17.2 per cent ) followed by the midlands (+14.2 per cent ), and west (+13.8 per cent ), while the southeast region saw the lowest rate of growth in prices outside Dublin last year (+11.0 per cent ). Outside the capital the highest average price was found in the mid east (€349,259 ) followed by the southwest (€279,844 ).
Looking at the outlook for the year ahead, the agency forecasts further growth in prices both in Galway and nationally, with regional price gains set to outstrip those in the capital where nominal values are already elevated, and affordability is more challenged. The agency is forecasting an average uplift in regional markets of 12 to 13 per cent this year. The factors underpinning the forecasts include continued strong economic and wage growth, the heightened household savings levels seen in 2020-21, the extension of Government initiatives for first time buyers announced in the Budget, strong demand from this cohort evident in the mortgage approvals data, and the prevailing low interest rate environment. On the supply side, while the supply of new residential completions is set to increase to around 26,000 units this year, this will still be well below the estimated 30-35,000 new units required each year to meet demand thereby putting upward pressure on prices in the market.
Commenting on the figures, James Heaslip, director of sales at DNG Maxwell Heaslip & Leonard, said: “Throughout 2021 we saw a keen interest from buyers eager to purchase well-located homes. Quality of life was a key factor - a result of Covid related lockdowns and restrictions certainly having an impact on buyer decisions and behaviours.”
The rental market throughout 2021 faced similar challenges and we can expect similar pressure to prevail in 2022 according to Fergal Leonard, rental director at DNG Maxwell Heaslip & Leonard. “We have seen a shortage of accommodation available to rent throughout the last 12 months with high levels of demand for properties that do come available,” he said. “Certainly private landlords leaving the market has had an impact on supply and we expect this trend to continue in the rental market into 2022."
A further trend noted by DNG Maxwell Heaslip & Leonard in 2021 related to the level of investment into people's existing homes – with a limited housing supply many buyers chose to expand and renovate as an alternative to trading up, however according to Alan Maxwell, commercial and valuations director at the firm: “We now find people running into problems here too due to the difficulty in sourcing labour and the increase in costs of materials. While we are seeing increased prices in the property market, we are also seeing buyers who have additional disposable income as a result of having spent less throughout the pandemic, and who also have more choice in where they can choose to live owing to more flexible working arrangements. We expect the Galway property market will remain robust this year with prices likely to hit double digit growth again for the year ahead.”
