‘We are going through a profound once-in-a-lifetime shift in the property market,” is how one estate agent described an extraordinary period during which Irish property prices have defied all predictions by holding firm or also increasing, sometimes substantially. The drift has been from Dublin to the regions.
Covid-19 hit us in March and soon afterwards experts were predicting the “cheapest house prices in ten years by Christmas”. But even the estate agencies were dumbfounded at what followed.
While prices did stumble in the first lockdown, from summer on they stormed back. It meant most postcodes in the capital were left even-steven on prices or else slightly up. But in other counties, substantial price increases were recorded for unexpected reasons.
To understand what has happened we need to look at what Covid-19 did to Irish home-buyers. First it brought Irish people home — suddenly and in droves — from the UK, the USA, Australia, Canada and the Emirates. Most came back with cash and looking to buy.
Next it caused those professionals who were renting in Dublin, (but not from Dublin), to move home to work remotely, also in big numbers.
This, along with the torpedoing of the Airbnb market with university students studying remotely, caused havoc in Dublin’s rental market. As hotel prices fell, it actually became much cheaper to live full-time at a quality hotel than to rent a dingy studio apartment in Dublin 1.
Those from other counties who had been based in Dublin prior to Covid, discovered that working remotely back in their home county was 100pc possible and 100pc practical and it also enabled them to be close to their families for the lockdowns that followed.
Looking at their options in Dublin, these renters were either facing back-breaking rents again or else buying a family home in an outlying commuter county which would leave them with a big commute. Many decided they’d had enough and that they would buy in their own home counties and work there for a few days in the week at least, if not for all of the week. Adding even more impetus was the growing gap between the cost of renting and the cost of buying — those who can buy are now paying much less in repayments than they would do in rent. Property prices are at 75pc of what they were in 2007 but rents are now running at 40pc higher, all over Ireland.
Most locations with big price increases cite a flood of buyers from outside the county as the main reason for it.
Another unexpected effect of the pandemic was a shortage of property for sale; sometimes supply was back by as much as 20pc as would-be vendors postponed selling, either because they feared having strangers through their homes for viewings or they decided to stay put in big homes with gardens rather than trade down to an apartment or smaller abode with less garden space.
On the demand front, Covid-19 also unexpectedly ‘supercharged’ home hunters, particularly in the second half of last year. A shrinking pool of property for sale and fears that their mortgage approvals would be pulled caused a sort of panic which again pushed up prices.
Homes with broadband, office space, big gardens and amenity benefits saw their prices rise ahead of others to reflect what buyers wanted. Finally, the introduction of new players in the mortgage market made getting a loan easier.
So where do we go next?
Estate agents are split. Some believe the Irish property market has been changed forever in the months since last March and that there’s no going back. That remote working success combined with Dublin’s ever increasing rents and house prices and traffic and bother, have finally pushed workers out; not only in search of cheaper property, more home for their money and better amenities; but to be close to their roots and families. They believe remote working success has taken us over a Rubicon.
Others believe buyers have been jumping the gun and once Covid-19 is gone, people will be asked to return to their offices, renters will return to Dublin apartments and business will resume from centrally located office blocks.
Which way it goes very much depends on what the employers want. Google is telling its Irish workers to stay at home while on the other hand, Microsoft is taking out a contract to rent more office space in Dublin’s city centre. We are truly in the unknown.
We see Kerry prices up 20pc, Donegal up 9pc, West Cork up 9pc, Wicklow South up 8pc. Meantime areas in Dublin which have the highest numbers of apartments remain static or have seen minor increases through the year.
While most estate agencies are predicting much of the same, albeit more muted price increases, we don’t really know what the lingering impact of a one-year-plus long global pandemic will be.
How Much Is Your House Worth? How much is theirs worth? Only the Irish Independent has the answers.