House prices at seven times average income as supply dwindles further

Asking prices for property rose by almost 10% in 2021, according to an analysis by the property listings website, myhome.ie.

Asking price inflation came in at 7.4% in the capital, but at 10.6% elsewhere around the country.

Quarterly prices also rose by 1.3% nationally in the final three months of the year with Dublin asking price inflation hitting 1.7%.

It was at 1.1% outside of the capital.

The mix-adjusted asking price for a property nationally stood at €311,000 at the end of 2021, the report showed.

In Dublin, it stood at €421,000 while elsewhere around the country it came in at €263,000.

“The unwelcome message from this quarter’s MyHome report is that there is little sign of conditions easing,” Conall Mac Coille, Chief Economist at Davy and author of the myhome.ie report said.

“This reflects the market grinding tighter, with the stock of homes listed for sale having fallen to a fresh historic low of just 11,300. In addition, Ireland’s labour market is performing exceptionally well, adding to housing demand,” he added.

He explained that the shortage of stock for sale or rental is most acute outside the capital, which is also evident in a marked decline in the average time to sale agreed to just three months nationally.

Mr Mac Coille said price inflation forecast for 2021 and 2022 would likely now be beaten.

“We had forecast an 11% rise in Residential Property Price Index (RPII) inflation through 2021 and 4.5% in 2022. However, RPPI inflation rose by 13.5% in October and so the out-turn for last year is now likely to beat our forecast.”

The report comes as the Central Bank continues a review of its lending rules which is scheduled to conclude in the coming month.

Analysis by myhome.ie showed that house prices are now seven times average incomes.

“Even still, Central Bank of Ireland and Economic and Social Research Institute (ESRI) estimates suggest that the mortgage lending rules have stopped house prices rising by an additional 10-25% over and above existing levels,” Conall Mac Coille said.

According to estimates, housing completions are expected to top 22,000 when the figures for 2021 are published.

A Central Bank report published before the onset of the Covid pandemic suggested that about 34,000 homes will have to be built each year for the next decade just to meet demand.

“It is promising to see construction activity has increased for seven months in a row to November, but the stark reality is that we will unfortunately be living with a dysfunctional property market for some time to come,” Angela Keegan, Managing Director of MyHome.ie said.

“We have never seen such a lack of stock on the MyHome.ie website and, given the significant increase in savings among prospective homebuyers, it is doubtful we will see much let-up in demand during 2022,” she added.

Article Source – House prices at seven times average income as supply dwindles further – RTE – Brian Finn

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