A 'soft landing' again predicted: House prices to rise rapidly through 2019 before easing - S&P
House prices in this country are to keep rising rapidly this year and next, according to the latest report from international ratings Standards and Poor’s.
This is in contrast to a string of other reports that indicate price rises are slowing down as buyers come up against Central Bank lending limits, which are restricting what they can borrow.
Standard and Poor’s (S&P) Global Ratings predicts house prices are set to grow by 9.5pc this year and 8pc in 2019.
It cites housing supply catching up with demand, and the labour market tightening even further as reasons for the property price rises.
The report implies that we are heading for a soft landing.
It says once supply improves however, “excessive pressure on house prices should gradually subside”.
House prices have continued to increase at double-digit rates in 2018 so far. In June, they were up 12pc on a year earlier.
S&P analysts wrote in a report on Europe’s housing market that Ireland is suffering from a chronic lack of properties to buy.
“Ongoing supply shortages will continue to be a factor underpinning house price inflation.”
It adds that increased activity by institutional investors, both domestic and international, has also underpinned house price growth.
In 2017, almost one-fifth of all residential property transactions were by institutional investors, including small-scale buy-to-let buyers, S&P noted.
S&P says the ongoing shortages of properties to buy will underpin house price inflation
The report states that even if house completions were to continue to grow at their “extraordinarily strong current rates” it will still be 2021 before supply meets demand, which is estimated at around 35,000 units needed a year.
House building was up 30pc in the first half of this year, which works out at an annualised figure of 7,950 units, S&P says.
As supply improves, excessive pressure on house prices should gradually subside.