Housebuyers are paying an average of 7% more for a new home than they would have a year ago, with experts warning prices are only going to keep rising as long as the enormous gap between supply and demand remains.
The prices of homes have almost doubled since their recession-era low in 2013. While there was no increase in the year to June 2020, over the past year they have surged again — rising by between 6.9% and 6.4% in Dublin, and 7.4% across the rest of the country — according to the Central Statistics Office.
The figures are based on the sums people are actually paying, and not on asking price.
The biggest surges have occurred in the Mid-West (up 8.7%) and the South-East (8.6%), though in the South-West, they are only up 2.7%.
In Dublin, residential property prices have risen 103.7% from their February 2012 low, while residential property prices in the rest of the country are now 95.8% higher than their trough, which was in May 2013.
Experts have warned that the picture will remain bleak for would-be homebuyers without substantial government intervention and a huge increase in the completion of new homes.
The Institute of Professional Auctioneers & Valuers (IPAV) said the rising prices of recent months highlighted by the CSO figures are likely to continue for the foreseeable future.
According to Pat Davitt, IPAV chief executive, the divergence between supply and demand is enormous and is unlikely to change in any meaningful way in the near future.
“Supply is so tight that in some cases would-be sellers are not putting their homes on the market, lest they may not be able to find a suitable property to buy or that by the time they do prices may have moved beyond their budgets,” Mr Davitt said:
Mr Davitt said that those on average incomes are unable to afford to buy a home in many areas. And for those who can afford it, a huge amount of the money they borrow and pay interest rates on for the lifetime of their mortgages goes back to the Government in taxes and levies.
“The new Government plan must tackle the supply issue in an unprecedented way,” he said, adding that the solutions must involve State investment as recently recommended by the ESRI as well as local authority utility investment and a review of the tax take on housing.
Joey Sheahan, head of credit at MyMortgages.ie, said: “It seems, from these CSO reports, that property prices are really only going one way for the foreseeable future and that’s up. This will continue as long as demand for properties outstrips supply.
“While construction has picked up, material supply issues and staffing shortages are hampering the delivery of much-needed homes,” he added.
Trevor Grant, chairperson of the Association of Irish Mortgage Advisors (AIMA), said the figures reflect months of construction delays caused by the pandemic.
“With most sites back up and running, we would hope to see an increased supply of new homes coming on stream later this year,” said Mr Grant:
Despite the rising cost of buying a home, Mr Sheahan argued that the high cost of renting means it is not necessarily a bad time to consider entering the property market.
“Rents continue to financially cripple those in rental accommodation, so, in a vast number of cases, the cost of repayments on a mortgage is going to be smaller than what people are shelling out on rent,” Mr Sheahan said.
He said the situation is much different now than the one that led to the property crash over a decade ago, with prices rising more slowly and more stringent lending rules in place.
Source: https://www.irishexaminer.com/news/arid-40358162.html
