Demand for property set to continue to exceed supply

Property prices will likely continue to rise in the absence of a significant increase in supply, with a new survey pointing to as many as 300,000 potential home buyers emerging over the next two years.

According to the latest KBC Homebuyer survey, more than one in four Irish consumers is now considering a property purchase, with almost half of these already “active”, a survey of some 2,000 Irish consumers has found.

Moreover, with some 70,000 homeowners now “ready and able to finance house purchase”, the survey suggests potential demand could grow to about 300,000 home sales over the next two years. However, supply isn’t growing at such a rate to match demand; in 2016 for example, fewer than 48,000 properties were sold in the whole year.

“This suggests a continuing excess of demand over supply underpinning pressure on prices,” the report says.

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Unsatisfied demand

Austin Hughes, chief economist with KBC Bank Ireland, says the survey suggests a pipeline of unsatisfied demand is building, due both to new entrants to the property market and because many existing households face a significant mismatch between their current accommodation and the housing they need.

“In turn, this suggests the current pressures on housing may be even greater than is often suggested,” he said.

The scale of the supply/demand imbalance means that many potential home buyers are not confident of actually finding a home, the survey shows, with fewer than half of would-be buyers “notably confident” they will have bought a home in two years.

But, while there have been fears of another property bubble brewing, the survey shows no signs of “buyer frenzy”, with purchasers cautious in regard to their own finances .