The forecast comes as affordability limits are reached in many locations. Purchasing urgency caused by initial Covid-driven price surges is expected to dissipate as the relocation trend for remote working in new locations is expected to calm. A nationwide survey of estate agents’ expectations shows they are hoping building materials inflation will ease or reverse this year as international supply lines damaged by Covid-19 restrictions get ironed out. A survey of 55 member firms of the Real Estate Alliance (REA) located throughout every county, for the Irish Independent, shows an average forecast of 6pc price increases for 2022. This comes off the back of 2021, which saw average house prices rise by 12.8pc nationally and 9pc in Dublin.

“There comes a point where people start to get pushed out of the market on price alone, and we see that happening in our most recent quarterly survey where the more affordable commuter and rural towns saw the biggest rises,” said REA spokesperson Barry McDonald.

Evidence that a calming has already started was borne out in the recently released REA Q4 figures for three-bed semi-detached homes, which showed Dublin prices relatively stable. In contrast, areas where buyers can purchase relatively more affordable homes, such as Swords in north Dublin, saw large price increases in the last quarter, indicating that there may be a ceiling of €400,000 that puts purchasing out of the reach of many buyers. Another factor expected to add to supply throughout 2022 is the continuing trend of landlords selling up investment properties.

The most recent REA quarterly survey showed that investors exiting the market accounted for a quarter of family homes sold in the last quarter. “With price increases continuing, values are now at an acceptable level for many investors to sell and exit the market” Mr McDonald said. “It is also clear that the changing legislation associated with the residential rental market is becoming a deterrent to non-institutional landlords.”

While an overall hike of 6pc is expected for 2022, agents expect Dublin to split into faster and slower rising zones. A lesser increase of 5pc is predicted in the capital’s more central postcode areas – but agents in north county Dublin are forecasting increases of 8pc as the supply of new homes on to the market is unable to meet demand. North Dublin saw rises of 17pc for three-bed semis in the past 12 months, with prices increasing by 4pc in the final quarter of the year. 

“Any areas of Dublin where prices are seen as affordable saw large inflation in 2021 as buyers bid for properties at their affordability limits,” Mr McDonald said. Such locations can expect higher increases than other locations again in 2022 albeit at a slower rate. “Swords is a perfect example, seeing three-bed semis rise by 27pc in the past 12 months, with prices increasing by €85,000 to €390,000.”

South County Dublin saw more manageable rises of 6pc in 2021 and agents predict that this upward trend will continue with a 5.1pc upturn forecast in 2022. Agents in three of the main cities outside Dublin are optimistic that markets will stabilise this year, with rises of 5pc predicted in Cork (3pc in 2021), Galway city (4pc) and Waterford (9pc). The biggest predicted rise nationally comes for Limerick city, where local valuation experts are forecasting 10pc growth. Commuter counties saw family home prices rise by 15pc in 2021, with 3pc growth in the last quarter as buyers chased affordability, and agents are predicting prices to grow by 5pc again this year.

Source: The Irish Independent - Mark Keenan,  3 January 2022