Covid-19 continues to impact  housing market

Covid-19 continues to impact  housing market

Average value of second-hand homes in Ireland increased by 2.2% in the fourth quarter of 2021, with values rising 9.6% cumulatively over the year.

SHERRY FitzGerald, one of Ireland’s largest estate agents, reported that the average value of second-hand homes in Ireland increased by 2.2% in the fourth quarter of 2021, with values rising 9.6% cumulatively over the year.

This is a notable increase in the growth of 1.3% recorded in 2020.

In Dublin, there was a further rise of 1.9% in the quarter, with values growing 7.2% in the year. In contrast, prices in 2020 increased 0.5% in Dublin.

Price growth continues to be stronger outside of Dublin, with average values nationally excluding Dublin rising 2.6% in quarter four, and 12.9% over the year.

According to Eoin Lynch, Economist, Sherry FitzGerald said: The overarching story for the residential housing market last year was the heightened levels of house price inflation. The severe supply constraints, exacerbated by the pandemic, and unexpectedly robust levels of demand all fuelled these elevated levels of growth.

“Although Dublin noted higher levels of inflation in comparison to recent years, inflation in the capital was perceptibly lower than elsewhere in the country. This has been a persistent trend in recent times, reflecting the more binding nature of the macro-prudential rules in locations where average values are higher.

“This divergence in price inflation rates looks set to continue going forward. While commencement activity has expanded since the reopening of construction sites in 2021, activity in many areas outside of Dublin remains substantially below what is required. This indicates limited future supply in these areas, leading to continued price inflation, albeit at more reduced levels than seen in the past year.

“Sales activity remains healthy, with volumes significantly ahead of 2020 and in line with pre-Covid-19 levels. In the first three quarters of 2021[ii], there were approximately 39,100 sales recorded on the property price register (PPR), excluding block sales and new homes acquired for social housing. This represented a 33% jump on the first nine months of 2020 and a marginal 0.3% increase on the comparable period in 2019.

“There were two noticeable trends within this data. Firstly, the volume of properties valued at more than €1m that sold during the year was up 46%, when compared to the same period in 2019. Secondly, there is a notable increase in activity in more rural locations. Counties such as Longford, Mayo, and Leitrim all recorded growth of 20% or more compared to 2019. In areas where the new homes market is more prominent, such as Dublin and its neighbouring counties, overall volumes lagged slightly behind 2019, as fewer developments were brought to market due to public health restrictions. This should only be a temporary feature, with stronger new homes sales expected in 2022.

“The second-hand market remains robust with sales 38% stronger than 2020 and activity up 4% compared to 2019. Second-hand sales in Dublin are in line with pre-COVID-19 levels.

“Owner-occupiers remained the most active purchasing cohort in the market in 2021. They represented 79% of all second-hand home purchases made through Sherry FitzGerald in the year, with first-time buyers comprising over half of all owner-occupiers.

Unfortunately, the exodus of landlords from the rental market continued unabated in the year with just 13% of purchases made by investors. Comparatively, 32% of all sales were investors selling their properties, signaling a huge disparity between those entering and exiting the market.”

In conclusion, Marian Finnegan, Managing Director, Sherry FitzGerald said: “Despite continued displacement in the market due to the pandemic and the related fallout, sales activity remains buoyant, most notably in the second-hand market. Regional areas and higher valued properties have seen the greatest growth in sales during the past year.

“The new year should see further expansion in sales activity, with new homes sales substantially stronger.

“The rental market saw significant disruption and dysfunction in 2021 and this looks set to continue in 2022. The disparity of two investors exiting to each new entrant continued, stoking heightened rental inflation in the year.

“With the limited scope of new rental supply on the horizon in many locations outside of Dublin, rental availability will be a significant bone of contention in 2022.

Over the course of 2021, the Government took significant steps to try and address failings in the market, chief among these the launching of the Housing for All programme.

“While not perfect it certainly represents progress and should be welcomed, however, additional action will almost inevitably be required in the new year given the depth of the challenge.”

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