“Price Growth Remains Elevated to Start 2022”
Statement by Marian Finnegan, Managing Director, Sherry FitzGerald.
March 31st , 2022
Sherry FitzGerald, Ireland’s largest estate agent, reported today (Wednesday, March 30th, 2022) that the average value of second-hand homes in Ireland increased by 2.8%[i] in the first quarter of 2022. This compares to 1.5% in the opening quarter of 2021. Overall, average values have increased 11.1% over the past twelve months.
Price growth in Dublin matched the national figure at 2.8% in the quarter, which compares to growth of 1% in Q1 2021. In the twelve months to Q1 2022, prices grew 9.2% in Dublin.
Although the rate of inflation outside of Dublin equalled the rate recorded in the capital during the opening quarter, over a twelve-month period price growth outside of Dublin has been greater at 13.6%.
Nationally, price growth is strongest in the Border region at present, where the combination of lack of supply and lower average values has resulted in greater levels of price inflation than noted elsewhere. In the year to Q1 2022, prices increased 19.9% in the region. Heightened levels of price inflation are prevalent across the country, with Dublin the only region where price growth was below double digits over the past twelve months.
According to Eoin Lynch, Economist, Sherry FitzGerald; The elevated rates of price inflation observed last year have continued into the opening quarter of 2022. Lower valued properties have recorded the largest increases in the rate of growth, albeit sustained price inflation is an almost ubiquitous trend nationally at present.
Although the outlook for the market is clouded given the uncertainty in how geopolitical events will unfold, there is some reason to believe the moderating forces will begin to take effect as the year progresses, tapering house price inflation. It appears increasingly likely that the ECB will begin to raise interest rates later this year. Additionally, new listings in the second-hand market are recovering towards their pre-pandemic levels and the heightened level of commencement activity over the past twelve months should help see some improvements in the levels of supply currently available. All these factors have the potential to coalesce to reduce the current heightened rates of inflation.
It must be noted however, that the supply horizon is much more favourable in Dublin at present, both in terms of commencements and granted planning permissions, notwithstanding the potential effects of judicial reviews. This will likely lead to a continued divergence in price and rental growth in and outside the capital, as witnessed in recent times.”
Last year saw housing sales almost fully recover to their pre-pandemic levels, with the second-hand market at its most active in over a decade. Excluding block sales and new homes acquired for social housing, there were over 54,600 housing transactions in 2021 according to the Property Price Register (PPR). This was 18.1% higher than 2020 although still 1.2% lower than 2019.
Activity in the second-hand market was brisk, with approximately 47,000 units sold. This was significantly ahead of the previous year and 2.5% stronger than 2019. Second-hand sales growth was strongest in lower average value and coastal counties, with as many as seven counties noting double digit growth on 2019 volumes. Transaction volumes in larger and more urban counties was on par with or just slightly below their pre-COVID-19 levels. Second-hand activity in Dublin and Cork was 1% lower than 2019, while Galway was 3.9% lower. In Limerick, second-hand sales in 2021 matched 2019 levels.
Overall transaction volumes were down in 2021, compared to pre-COVID-19 because of fewer new homes sales. New homes sales last year were only marginally, 0.4%, ahead of 2020 totals, but still fell short of 2019 by almost 20%. As noted previously, lower construction output due to public health restrictions, as well as greater numbers of new homes acquired by public bodies for social housing restrained overall new home sales volumes.
In conclusion, Marian Finnegan, Managing Director, Sherry FitzGerald said; “The past two years have been incredibly testing times for the housing market and for the construction industry at large. Developments over that timeframe including COVID-19, significant inflation in the cost of goods and materials; and the knock-on effect of the Russian invasion of Ukraine have all hamstrung efforts to increase hew homes output and alleviate the housing crisis.
Therefore, it imperative that the Government supports the market, and does so with the utmost urgency. Despite only being announced last year, Croí Cónaithe and the Shared Equity scheme are already behind schedule in terms of implementation. There needs to be greater onus on the part of the Government to expediate and add to these measures. Similarly, there remains no clarity on the future of Help-to Buy which has proved to be a significant boon to would be buyers and to stimulating new homes development.
Finally, and critically, the start of the new year has seen no let-up in the exodus of landlords from the rental market. Without action, there will be further deterioration of an already dismal situation”.
- ENDS -
For any further information, please contact:
Sherry FitzGerald Group
Ph: 01 2376 500 / 086 252 3277
Managing Director, Residential & Advisory
Sherry FitzGerald Group
Ph: 01 237 6341 / 086 814 8251
[i] The Sherry FitzGerald house price index model reflects achieved prices which results in a differential when compared to other industry commentators using data sources such as vendor expectations, asking prices, average values etc.