In the last three months of 2020, the Irish market has experienced the so-called “strongest quarter of home sales in the last decade”. While the official transition figures have not yet been published, many advisors state that this past quarter has been the largest jump in sales for many years. In the number of house sales last year from January until September, there was nearly 29,100 number of house sales. Which was down 25% from the previous year. But there is an estimated amount of 18,000-20,000 number of house sales just in the final quarter.
This sudden jump in the number of sales is largely attributed to the number of prospective buyers that were locked out of the market in the first lockdown, and the market reopening at the final quarter had led to a frenzy of rushed activity as people once again were able to utilize their interests in the market. Since people were also afraid of the potential of having another lockdown occur, they were more rushed to make a decision and in that sense, the entire process of house purchasing was squished into a smaller time frame. It is estimated that the usual process of 5-6 months was squished into a single quarter for many individuals.
It is forecasted that there will be a moderate rise in housing prices this year, somewhere between 1-3% due to the lack of shortage of supply in the housing market. However, there are also warnings of supply pressures on the sales side will translate to the rental market in that the rental rates may increase even more than housing rates.
Rental inflation is predicted to sit at around 5% this upcoming year, and even more in Dublin’s central business district once the offices reopen and activity in such enclosed and packed spaces begin to pick up once more. A major trend that has been noticed in the doldrums in 2018-2019 has been that there has been a strong rebound of the proliferation of cash buyers in the market, and how prevalent these individuals are in increasing market activity and volume of transactions.
It is also predicted that the supply in the housing market is not going to be able to match demand until the market stabilizes by 2024. The government’s new shared equity scheme, which aims to help people buy housing, and the potential to assist in the delivery of 3,000-5,000 houses annually. But even with this help, the discrepancy between supply and demand created by the pandemic may just be too large for even the government to fix immediately.
Lucas Zhang was a Finance major at Ohio State University. He writes about finance, mortgages, and technology for Irish Mortgage Brokers.