Why are house prices surging in Ireland?

House prices in Ireland have surged in the last 12 months. Two separate reports have pointed to a 13 percent increase in house prices over the last twelve months, both in Dublin and nationwide. Property website myhome.ie, which is owned by The Irish Times, pointed to a ‘red hot’ demand outpacing supply as one of the main reasons for this increase in their latest quarterly report. According to MyHome, house prices nationally increased 13 per cent to €303,000 in the second quarter of 2021, breaking the €300,000 mark for the first time in recorded history. In Dublin specifically, they found the average price to be €412,000, representing a 10.6 percent increase on the year. Daft.ie, another property website, reported similar increases in the price of homes on its website, up 13 per cent on the year to €284,000, the highest such increase since 2015.  This increase means house prices have increased for four consecutive quarters, the first time this has happened since 2014.

This substantial increase put house prices nationally 14.3 per cent lower than their highest-ever level in 2007. In Dublin, house prices are 19.6 per cent lower than their highest levels in February 2007. The number of homes for sale has decreased over the past year as well, and this decrease in supply is one of the many factors contributing to recent price increases.

While property prices are up all across the world, there has been a pretty significant difference between the price trends in Dublin and elsewhere in the country. Property prices in Dublin increased 8.4 per cent in the year leading up to June 2021. While this is very significant (it is the highest rate of inflation since 2018), price increases in other parts of the counrey were nearly twice as large, according to Daft. For example, in the cities of Cork, Limerick, and Waterford, prices rose 14.3 per cent, 15.5 per cent, and 14.8 per cent, respectively. Prices increased in all 54 of the regional markets on Daft’s report. The biggest increase, however, was in rural areas. Counties like Longford, Wexford, Waterford, Kerry and Roscommon all saw increases of over 20 per cent on the year.

When the pandemic first emerged last year, many experts predicted a significant drop off in housing demand due to the decrease in income and rising levels of unemployment, but the opposite has happened. Demand has increased to record levels, indicated by the record low time to sale agreed of 3.8 months. This increase in demand has a direct relation to the pandemic, as remote work and increased savings have led to more people looking for homes. Supply, however, has been decreased by covid restrictions, further adding to the existing pressures in the market and driving prices higher.

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