Property prices expected to rise by 4% in the next year (2024)

NATIONAL PROPERTY PRICES are expected to rise by 4% over the next year, the Society of Chartered Surveyors Ireland (SCSI) has said.

A new report from the society said that prices are likely to rise by 3% in the next three months alone, but the rate of increase is due to fall after a post-pandemic surge.

Property prices have increased by 118% from their lowest point in early 2013.

John O’Sullivan, Chair of the SCSI Practice & Policy Committee, said that recent high inflation rates “were simply not sustainable in the long term.”

The number of agents who cited economic factors as the key drivers of inflation has almost doubled, from 13% to 25%.

These factors include inflation, rising interest rates, supply chain issues and geopolitical uncertainty caused by Russia’s invasion of Ukraine.

But O’Sullivan said “the vast majority of agents still believe market factors – namely low levels of supply – will continue to underpin prices in the near term.”

Affordability scenarios

The report included affordability scenarios for Cork and counties in the Dublin commuter belt.

According to these scenarios, a couple on a combined salary of €89,000 who want to buy a new house and have the 10% deposit will face a shortfall of €64,000 in Kildare and €30,000 in Cork.

The only place the couple will afford to buy is in Meath.

“These figures show that buying an affordable property remains out of reach for thousands of Irish people on average salaries looking to buy their first home,” O’Sullivan continued. “Of course, you are also going to have thousands of people on salaries below this level.

“Unfortunately, with construction costs continuing to spiral and interest rate increases on the way it looks as if the situation facing first time buyers is set to become even more challenging.

“From a homebuilder’s perspective, if people can’t afford new homes, that raises questions over their viability and overall housing supply.”

Forecast

The Central Bank’s forecast for housing completions is 24,500 in 2022, then increasing to 29,000 in 2023 and 33,000 in 2024. This is a reduction of approximately 3,500 units compared with its previous forecast for the same period.

O’Sullivan said: “With a population now in excess of five million for the first time since 1841, a trend towards smaller average household size, current positive net migration, plus commitments to provide accommodation to incoming refugees from Ukraine, it’s clear the need to unlock additional housing supply remains acute.”

“While lack of supply is still the dominant issue there are some signs the situation has improved slightly.

“While 85% of agents reported low levels of stock for sale at the end of 2021, this dropped to 77% in the latest survey

“Due to the continuing rise in working from Home post-Covid, many buyers are continuing to consider properties outside of the larger urban centres as long as they have a good broadband connection.”

Rental sector

The report said that, according to agents, the top reason landlords are leaving the rental market is the complexity of rental legislation and regulations.

O’Sullivan said: “Whilst many new apartment developments enter the private rental market, the ever-reducing supply of private rental has greatly contributed to the current dysfunctional rental market.”