Property prices to increase by 4.5% in the next year, survey finds

By Gráinne Ní Aodha, PA

A survey of estate agents indicates they expect property prices to increase by an average of 4.5 per cent over the next 12 months.

The Society of Chartered Surveyors Ireland (SCSI) said that 77 per cent of its agents believe prices are increasing but will level off soon – up from 43 per cent last year.

Almost half of SCSI members believe the key factor influencing house prices over the next 12 months will be the supply of new housing.

In its mid-year market monitor of residential properties, three out of four estate agents reported low stock levels and almost half said the lack of supply is the main driver of price inflation.

SCSI vice president Gerard O’Toole said the former figure was up from 71% twelve months ago, which highlighted “insufficient” supply.

“Our members are seeing the impact of the lack of supply on the ground and believe this shortage will continue until annual completion levels ramp up significantly,” he said.

“A year ago, 35 per cent of agents identified the lack of supply as the main issue for the price movements, now that number is 46 per cent.”

“The other main factors, which our members believe are influencing price movements include the state of the economy, interest rates and the availability of credit, access to schemes supporting house purchases such as help-to-buy and changes in the levels of immigration and emigration.

“The findings show a slight decrease in concerns about interest rates since the last report, reflecting the ECB’s recent decision to reduce rates.”

“One area of concern for agents is an increase in the number of sales agreed but not proceeding to completion.

“They believe delays caused by planning irregularities, non-compliance with building regulations as well as delays regarding probate and accessing property deeds, are continuing to pose challenges.”

The survey also examined a scenario where a couple with a combined income of €107,000 and a 10 per cent deposit saved are looking to buy their first home, a three-bed semi-detached house, across five counties.

According to these scenarios, the couple will afford to buy in only one of the five locations, Meath, and only then with the support of the First Home Scheme and the help-to-buy grant.

It said that in Wicklow and Kildare, the two most expensive counties to buy a house in Ireland, couples will face shortfalls of €78,000 and €65,000 respectively.

Mr O’Toole said “the widening affordability gap is a real concern” as last year’s case study couple could buy in three locations without the support of the First Home Scheme.

“While buyers with savings should be able to overcome the gap in Meath, Galway and Cork, new three-bed homes in Wicklow and Kildare remain totally out of reach for people on these salaries.

“In addition, there are thousands of people on lower salaries who will not be able to buy and will require support.

“Moreover, the average cost of the three-bed homes in Kildare, Wicklow, Cork and Galway exceeds the price ceilings set for the FHS making these homes ineligible for the scheme.”

The SCSI survey also indicates that, though there has been an increase in the number of buy-to-let properties coming on the market in the past six months, it has fallen “significantly” since the final months of 2023.

“The ratio of owner-occupied properties to investment buy-to-let properties which agents are selling has remained unchanged at 60:40.

“While agents have noticed a noticeable fall off in the number of landlords leaving the market, the number is still rising.

“The three main reasons they are leaving is because rent legislation is too complex and restrictive, net rental returns are too low, and some landlords are coming out of negative equity.”