Property prices on course for 4.5% growth – estate agents
Estate agents expect property prices nationally to increase by an average of 4.5% over the next 12 months.
That is up from an expectation of growth in prices of 1% in 2024 in a previous study carried out in January.
The surveys were conducted by the Society of Chartered Surveyors Ireland – SCSI – among its member estate agents.
According to its latest Mid-Year Market Monitor, three quarters of agents reported low available housing stock levels on their books.
That was up from just over 70% who reported the same finding 12 months ago.
“Our members are seeing the impact of the lack of supply on the ground and believe this shortage will continue until annual completion levels ramp up significantly. A year ago, 35% of agents identified the lack of supply as the main issue for the price movements, now that number is 46%,” Gerard O’Toole, Vice President of the SCSI said.
Around four in five agents said they regarded residential property prices as being ‘expensive’ or ‘very expensive’.
17% said they believed them to be of ‘fair value’.
When asked where they believe the market cycle to be, 77% of respondents said they believed prices were still increasing but that it would level off soon.
That was up from 43% who expressed a similar view last year.
Other than supply, the main factors identified as affecting prices included the state of the economy, interest rates and the availability of credit, access to schemes supporting house purchases such as Help to Buy and changes in the levels of immigration and emigration.
“One area of concern for agents is an increase in the number of sales agreed but not proceeding to completion,” Mr O’Toole said.
“They believe delays caused by planning irregularities, non-compliance with building regulations as well as delays regarding probate and accessing property deeds, are continuing to pose challenges.”
Affordability gap
The SCSI expressed concern at what it believes to be a widening affordability gap that exists in the market.
It developed a number of scenarios to measure the extent to which a couple on a combined salary of €107,000 can afford to buy a property.
It measured their purchasing power for a new three-bed semi-detached home in five locations – Meath, Kildare, Wicklow, Cork and Galway.
They have the 10% deposit required having availed of the Help to Buy relief.
The analysis pitches the maximum borrowing level at 3.5 times income, although the relaxing of Central Bank rules has meant that first time buyers can now avail of a borrowings of up to four times their income.
The study concluded that the couple would be able to afford the purchase in just one location – Meath – and then only with the support of the First Home Scheme (FHS).
The FHS could provide buyers with up to 20% funding towards the purchase price for those drawing down the Help to Buy scheme also.
Prospective buyers in Wicklow and Kildare would face a substantial shortfall.
Mr O’Toole said the figures pointed to the challenges facing first-time buyers in the current market.
“Last year our case study ‘couple’ could buy in three locations without the support of the First Home Scheme (FHS). This year a new home is only affordable in one and that is with FHS support, so the widening affordability gap is a real concern.
“While buyers with savings should be able to overcome the gap in Meath, Galway and Cork, new three-bed homes in Wicklow and Kildare remain totally out of reach for people on these salaries.
“In addition, there are thousands of people on lower salaries who will not be able to buy and will require support. Moreover, the average cost of the three-bed homes in Kildare, Wicklow, Cork and Galway exceeds the price ceilings set for the FHS making these homes ineligible for the scheme.”
Mr O’Toole pointed to some positive developments in the construction sector, including the levelling off in construction costs and the expectation that interest rates will continue to fall.
“The current pace of property price inflation is not sustainable. In order to get to grips with it we need drive up supply as a matter of urgency while also doing everything possible to drive down costs.”
“Soft costs make up around half the cost of delivering new homes, and while the SCSI welcomed the Government’s decision to waive development levies, more work remains to be done with regard to the cost of finance for homebuilders, planning reform, the resourcing of local authorities and the costs of utility connection charges,” he concluded.
Article Source – Property prices on course for 4.5% growth – estate agents – RTE
