The pandemic marks an extraordinary shock to housing demand with the average cost of a home in Ireland now estimated to be €275,751. Unemployment is estimated to be up 20% every month since March 2020. With unemployment so high and demand so low you would think of a decline in prices.
What has happened over the last 12 months has been the opposite. Comparing the first quarter of 2021 with the same period a year earlier, prices on average were 7.6% higher.
Dublin prices are up 6.9%, year-on-year, compared to increases of 4% in Munster (outside its cities) and just 2% in Connacht-Ulster (outside Galway city). There is perhaps more support for the notion that Dublin’s exurbs and other cities are seeing the biggest shift in demand. Prices in Leinster (outside Dublin) are up 12% year-on-year and prices in the four other cities are up between 11% and 12% in each case.
There is some competition between Dublin and the other cities. The biggest year-on-year increases in the country are in Offaly (up nearly 18%) and Kilkenny (up just over 18%).
Demand has stayed largely steady, at a strong level. For most of the past year, economic activity has not been happening not because it doesn’t want to but because it is not allowed to. While many people have had their jobs or even businesses wiped out, for huge swathes of the economy, their incomes have stayed the same and their expenditures have gone down. This results in these crazy house prices as strong demand and very weak supply can be seen in availability. There were fewer than 12,000 homes available to buy on March 1 this year, down 40% on the already very low level seen a year ago.
With the economy set to steadily open back up soon it will be interesting to see how the market reacts.
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