Sherry FitzGerald reported today that despite the economic challenges caused by COVID-19, property prices have seen a moderate increase in prices in the second-hand market throughout the country.
The average value of second-hand homes in Ireland increased by 0.5% in the third quarter of 2020, representing the highest level of quarterly growth in two years. Prices have now risen 0.6% over the first nine months of the year.
In the capital, prices increased 0.2% in the quarter and by the same figure in the year to date. This compares to a decrease of 0.5% over the opening nine months of 2019.
Outside Dublin, price growth was more elevated. Average national prices rose 1% in the third quarter and 1.3% since the start of the year. Price growth was particularly strong in the West region in quarter three, increasing 2.5%. All regions across the country recorded a rise in prices in the quarter.
Commenting on the news, Managing Director of Sherry FitzGerald, Marian Finnegan said: “Residential property prices have begun to increase again, rising in both this quarter and in the year to date. Furthermore, potential homebuyers’ commitment to purchase has remained buoyant despite current uncertainty levels.
She added: “It is worth noting that the short-term outlook for supply is not encouraging with reduced levels of completions and commencements over much of the spring and summer.”
Supply shortages have been an enduring feature of the market in recent years. This has been exacerbated further by the onset of COVID-19 and the national restrictions which ensued. While there was some uptick in supply levels in the summer, they remain below last year levels and severely short of what is required.
According to the Property Price Register (PPR) , approximately 18,700 homes sold nationally in the first half of the year This figure, which excludes block sales and new homes acquired for social housing, represented a 22% drop year-on-year. Dublin saw a greater reduction of 28% with only 5,500 homes sold in the period. Due to the lag in recording transactions to the PPR, data for quarter two is the most accurate available
When this figure is broken down it shows that new home sales in the first half of the year decreased 26% compared to 2019, while second-hand sales declined by 21%.
The make up of buyers has remained broadly consistent in the year with owner occupiers remaining the most prevalent. This cohort accounted for 80% of all purchasers who bought through Sherry FitzGerald in the first nine months of the year, with first-time buyers accounting for 54% of all owner occupiers.
The withdrawal of investors from the market has also remained consistent accounting for just 12% of purchasers with Sherry FitzGerald, while 32% of vendors were selling investment properties.
This prolonged mismatch between investors entering and exiting the market is reflected in the Residential Tenancy Board’s (RTB) registration data. The data reveals that between Q2 2019 and Q2 2020, the volume of private rented tenancies has fallen by over 11,000 and the number of private landlords in the market by over 5,500.
Ms. Finnegan said that despite the economic shock caused by the pandemic, the housing market is proving to be resilient, but that the housing crisis has worsened.
She stated: “The fallout from COVID-19 will only exacerbate the pre-existing failings that have been evident for the past few years. The combination of reduced construction activity, a loss of second-hand stock coming to the market and the continued exodus of investors from the residential lettings market all serve to further damage market stock levels.
Ms Finnegan concluded: “As such, it is of even greater importance that the Government address the lack of supply in the market by facilitating greater construction activity through improved viability and affordability measures.”