Irish House Prices on the Verge of a 2% Increase - Here's Why!



In a recent survey conducted by estate agents and valuers, it has been predicted that Irish house prices are set to rise by 2% in the coming 12 months.

In a recent survey conducted by estate agents and valuers, it has been predicted that Irish house prices are set to rise by 2% in the coming 12 months. This news comes as no surprise considering the ongoing lack of housing supply in the country. Despite a sharp increase in housing commencements in the first half of the year, there are concerns about labour shortages and construction cost inflation that may impact the completion of these projects.

According to data published by the Department of Housing, building control authorities received 2,574 commencement notices for new homes in June alone, representing a remarkable 25% increase compared to the same month last year. This brings the total number of new units commenced in the Republic so far this year to 15,561, marking a 10% increase from the same period in 2022. However, despite these promising figures, the Society of Chartered Surveyors Ireland (SCSI) warns that inflation and labour constraints may contribute to a decline in the number of projects completed this year.

The midyear housing monitor report released by SCSI reveals that estate agent members expect approximately 27,000 units to be finished in 2023, down from about 29,000 in the previous year. Looking ahead, the body projects an increase in completions to 29,500 in 2024 and 32,500 in 2025. However, these figures fall short of the revised target set by the Government, who aimed for 33,000 new units each year up until 2025 as part of their Housing for All strategy.

Given the current housing shortage, it is hardly surprising that estate agents surveyed by SCSI believe that house prices will continue to rise. On average, these agents expect a 2% increase in house prices over the next 12 months, primarily driven by the lack of supply. However, it is worth noting that approximately 47% of the agents surveyed believe that the market has reached a "mid-upturn phase." This suggests that while house prices are still on the rise, the rate of growth may begin to level off in the near future.

The SCSI report also includes affordability data for five scenarios involving couples with average salaries of €89,000. The analysis reveals that a couple who wishes to buy a new home and has a 10% deposit after availing of the Help to Buy scheme can afford properties in Meath, Cork, and Galway. However, prospective buyers in Wicklow will face a shortfall of over €83,000, while those in Kildare will encounter a shortage of almost €32,000.

As the housing market continues to face challenges, including rising construction costs, the feasibility of new projects remains uncertain. This is likely to impede any significant changes in the housing market across the country in the short term.

The current situation in the Irish housing market is characterized by a lack of supply and rising prices. The data from estate agents and valuers paint a clear picture of the challenges the market faces in terms of labour shortages, construction cost inflation, and completion constraints. While an increase in housing commencements is encouraging, the anticipated decline in completed projects this year underscores the ongoing obstacles faced by the industry.

Irish House Prices on the Verge of a 2% Increase - Here\'s Why!

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