SCSI expects national property prices to increase by 6% this year
More than 80% of estate agents who are members of the Society of Chartered Surveyors Ireland believe that current property prices are either “expensive” or “very expensive”.
The SCSI’s 42nd annual Residential Review and Outlook report also predicts that national property prices are set to increase by an average of 6% over the next 12 months.
This is up on the 4.5% increase which SCSI agents forecast for the market in the summer of 2024.
When asked where they believe we are in the market cycle, 61% of respondents to the SCSI review believe prices are rising but will level off soon.
Gerard O’Toole, Vice President of the SCSI, said the current rates of property inflation of about 10% are unsustainable.
“Our survey responses suggest agents believe there will be a shift towards more balanced growth expectations with less emphasis on rapid price increases. Given the affordability challenges facing all buyers, particularly first-time buyers, a slowdown or period of market stabilisation would be most welcome,” he said.
Today’s survey shows that 76% of estate agents reported low stock levels – up slightly on last year – with the majority of agents indicating that the lack of supply was the main factor influencing expectations around house price movements.
Mr O’Toole said the lack of supply will remain the dominant issue until annual completion levels are ramped up to 40,000 plus.
“A year ago, 40% of agents identified the lack of supply as the main issue affecting price movements, now that number is around 60%. That and the fact three out of four agents (76%) are continuing to report low stock levels, reflect the reality of the Irish property market,” he said.
“The other main factors, which our members believe are influencing price movements include lower interest rates and the availability of credit (12%), access to schemes supporting house purchases such as Help to Buy (8%) and changes in the state of the economy (8%),” he said.
“53% of agents report a slight improvement in credit conditions and believe this was the main factor impacting the higher than anticipated price movements in late 2024,” he added.
In its latest report, the SCSI has included five scenarios for a couple earning a combined income of €107,000 and availing of the Help to Buy scheme towards their 10% deposit in its latest report.
The scenarios demonstrate the affordability gap, if any, which exists between the total mortgage purchase limit available to a couple on average incomes looking to buy their first home and average new house purchase prices in five different locations.
They included new three-bedroom semi-detached, two bedroom terraced and three-bedroom terraced homes.
The analysis revealed that all house types across Meath, Cork, and Galway were affordable for this first-time buyer couple while in Kildare and Wicklow the two-bed terraced and three-bed terraced houses were affordable.
But three-bed semi-detached houses remain unaffordable in both Kildare and Wicklow, with affordability gaps of €13,900 and €35,500, respectively.
Gerard O’Toole said these trends suggest that the pace of property price growth is higher than income growth in several regions, especially Dublin’s commuter counties, creating pressures for prospective buyers.
He said that while Dublin is not included in the scenarios, based on house prices in the capital, it is clear they are not affordable based on the income thresholds within the study.
“It’s also clear that unaffordability is restricting employment opportunities for many newly qualified professionals with many job vacancies remaining unfilled, particularly in education and health,” he said,
“It’s important to note that couples on lower incomes will struggle to purchase a home within the private market with their only realistic prospect seeking to qualify for either social or affordable housing,” he added.
The Vice President of the SCSI said that in the long term the only way to moderate and gradually lower the affordability gap is by ramping up the supply of new homes.
“At the moment new housing supply is being curtailed by infrastructure deficits in water, electricity and sewerage. Zoned lands cannot be developed without these essential connections and considerable additional resources need to be applied by the state in this area as a matter of urgency,” he added.
Article Source – SCSI expects national property prices to increase by 6% this year – RTE
