Ireland’s surging property prices are the result of “perfect storm” of stuttering supply and record household savings.

A new report from MyHome.ie has found that asking prices around the country rose by 6.3% last year – the fastest rate in nearly three years.

Asking prices in Dublin were up 4.8% while the rest of the country saw a surge of 7.2%.

On The Hard Shoulder this evening, financial planner Eoin McGee said a “perfect storm” of circumstance has caused the rise in property prices.

“What has happened here is we have two million people in the country who are better off as a result of COVID,” he said.

“That is because they stayed in work with some kind of Government support but their salaries remained the same while their expenses fell through the floor and they saved more.”

Savings

He said Irish households now have around €123bn in savings sitting in deposit accounts.

“That is significantly up on where we were,” he said. “Usually, we would save around €443m a month. In the month of April, we saved €3bn in that month alone.”

“At the same time, construction stopped and we were left in a position where we expected supply to be somewhere around 18,000 to 20,000 supplied – most people would suggest we need around 35,000 so let’s say we got around half the supply we needed.”

Supply

He said the dearth in supply is not limited to new builds – with a record low number of second-hand houses currently on the market.

“I was looking at Daft earlier on and they were saying supply of second-hand houses was down around 15,000,” he said.

“Since they started in 2007 or 2008, they haven’t had that low a figure so there has been a significant stalling of supply on every end.”

He said house prices will not fall significantly until the supply issue is properly addressed.

Waiting game

Also on the show, June Dora, from June Doran properties in County Carlow said demand is currently “very strong” with supply now a real problem.

“If I had 50 houses in the morning, I can tell you, I would have them all sold by the end of February,” she said.

She said realtors are really struggling to get houses on the market.

“A lot of people who were scheduled to put their houses on the market in January are now holding off,” she said. “I don’t know whether we are going to get them up in February or not.

“Supply is our biggest problem. We have no end of calls and enquiries but the supply is down.”

First-time buyers

She said the first-time buyer market is generally aimed at new builds due to the Government supports available; however, people struggling to find new homes are now turning to the second-hand market.

“Those people who are not getting new houses in the areas they want are looking at second-hand houses and snapping them up,” she said.

“They are not just saying, ‘I am going to wait and get a new house where I want it and avail of the Help to Buy scheme,’ they are just buying what they want, where they want and for a lot of them, they can reach far beyond a three-bed semi.

“The savings in 2020 were huge in comparison to previous years.”

She said the pandemic has also seen a “huge shift of people coming from Dublin” and looking for homes in other areas.

“I released 20 new houses in September and a lot of those people came from Dublin,” she said.

“Some had some association with Carlow and some had none. They were coming in to find better value. You had a range of income levels there, but still Dublin was out of reach.”

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