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‘Air of desperation’ driving property prices

Demand in the housing market has been described as “red-hot” and “frenzied”, after a report found that the asking prices for homes rose at an annual rate of 13% in the second quarter of this year.

The figures, compiled by property website MyHome.ie and stockbroker Davy, found that the average asking price across the country in the three-month period (April to June) was €303,000. This represented an increase of 6.7% from the first quarter.

Dublin prices jumped by 10.6% over the 12 months, but prices outside the capital rose at an even faster rate of 13.6%.

‘Red-hot’ demand

The author of the report, Davy’s chief economist Conall Mac Coille, said that demand in the market was now “red-hot”.

“The average time to sale agreed has fallen back to a record low of 3.8 months, indicating that whatever stock is available is being purchased ever more quickly,” he said. “Once again, transactions are now being settled above asking prices.”

The economist said that price gains were mainly due to a lack of housing supply, while demand had remained robust, despite the pandemic.

He said the double-digit percentage increases would put more pressure on the Government to address the housing issue.

‘No easy answers’

“Unfortunately, there are no easy answers to solve Ireland’s structurally high build costs and lack of construction sector capacity,” he added.

MyHome.ie’s managing director, Angela Keegan, who described the market as “frenzied”, said that there was a “sense of desperation” that was driving asking prices up.

“To add to matters, it appears that the savings generated by home-buying professionals during various lockdowns have helped fuel property price inflation, while also diluting the effect of the Central Bank’s mortgage lending rules,” she said.

End of year dip

The report’s authors did say, however, that they expected price inflation to dip back into single digits by the end of this year.

Mr Mac Coille said that around 21,000 new homes were expected to be built this year — well short of demand, but better than more pessimistic projections.

He added that housing starts were close to 5,000 units in April, indicating a degree of catch-up after the closure of the sector during the third lockdown.