Chartered estate agents say they are struggling to meet demand for property, especially from first time buyers.
A survey of 800 agents, carried out by the Society of Chartered Surveyors Ireland, found that over two thirds predicted property price increases in the year ahead with 24% expecting prices to remain the same and 8% anticipating reductions.
The average price increase in 2021 would be of the order of 4%, the report concludes, with lack of supply acting as the main driver of prices.
Property prices in Dublin are expected to see average increases of 3%, while Connacht-Ulster – which has some of the lowest prices – will see an increase of 6%.
An increase of 4% is predicted for Leinster while prices are forecast to increase by 5% in Munster.
The report’s findings underline the scale of the supply challenges facing the market.
While three quarters of agents reported sales instructions increasing or remaining the same in the third quarter, by the final three months of the year the figure had dropped to just over half with the remainder reporting a falloff in instructions.
Several agents said the slowdown was ultimately due to lack of supply with potential vendors deferring selling due to the lack of alternative options.
The Covid-19 pandemic largely dictated the market in 2020 and it looks like that trend will continue in 2021.
“The transition to working from home has led to a reordering of priorities and is driving interest in larger properties in regional locations with good broadband and lots of amenities as well as holiday homes in secondary locations,” TJ Cronin, Vice President of the Society of Chartered Surveyors of Ireland, said.
“The trend away from urban areas is also reflected in the survey’s price projections,” Mr Cronin stated.
“While Covid-19 has badly affected certain sectors, it has enabled prospective buyers who work in areas which haven’t been hugely impacted, such as pharma, tech, financial and the public sector, to increase their savings.
“We’ve also seen a big inflow of Irish people returning from abroad, to Dublin in particular, and this has underpinned prices at the upper end of the market. In a situation where you have very limited supply – 83% of agents report having low levels of stock available in Q4 – the fear of missing out on a property will very often trump the fear of paying over the odds,” he added.
According to an analysis by consultants EY, the construction sector will not return to 2019 levels of completions until 2024 at the earliest.
It is estimated that in excess of 21,000 housing units were completed here in that year with the figure expected to have dipped below the 20,000 mark once again 2020.
A newly instituted closure of building sites in recent weeks will likely impact supply in 2021.
The Central Bank, among others, estimates that up to 35,000 units need to be completed every year in Ireland to keep up with demand.
The SCSI concludes that housing supply and demand equilibrium may not be achieved until after 2030.
By that stage, it predicts the sector would need to be building in excess of 60,000 units per year, over three times the current output and almost double the official estimates.