Shortage of houses pushes prices up €20k

HOUSE prices have jumped by nearly €20,000 in the space of a year amid a housing shortage that has only been worsened by the pandemic.

Daft.ie’s latest property report for the first quarter of this year, reveals that house prices have risen by 7.6% since the end of March last year.

It is the second quarter in a row where prices rose by nearly 8% compared to the corresponding period last year.

This is roughly twice the rate of inflation seen in 2018 and 2019, with the average asking price nationwide now standing at €275,751.

Economist at Trinity College Dublin, Ronan Lyons, said the figures confirm the impact the pandemic is having on the market, saying it was a ‘massive shock to supply with seemingly far less impact on demand’.

‘The total number of homes listed for sale in the 12 months to February nationwide was just 45,700, down a third on the previous 12-month period,’ he said. ‘This sudden collapse in supply – at a time when demand has held up remarkably well – has converted into sharp upward pressure on prices.

‘It highlights the importance of supply in determining market outcomes and is a reminder that, even when the pandemic subsides, the need for a substantial volume of new homes to be built each year will remain.’

Prices in Dublin city rose by 6.9% within the year, with an average asking price now at €398,127 – the highest it has been since the last roars of the Celtic Tiger in 2007.

According to Mr Lyons, the conventional wisdom of the last year that Dublin would be uniquely badly affected by Covid-19, with long-distance commuters opting for homes in cheaper locations and working from home, has not panned out. ‘There is little evidence of any such urban-to-rural switch in the housing market,’ Mr Lyons said.

The average asking price in south county Dublin is now €625,713, which is up 8.1% on last year, making it the most expensive area in the country to buy in. The counties with the cheapest average asking prices are Leitrim (€132,977), Roscommon (€150,833), and Sligo (€152,225).

Mr Lyons added that as a result of people saving more in the pandemic, ‘those homes that are coming on to the market are easily finding buyers’.

Institute of Professional Auctioneers and Valuers CEO Pat Davitt said: ‘The housing market is like any other market; it’s driven by supply and demand. Builders must get back, safely, to building more homes.