‘People are really looking for a home, not just a house’

Ireland’s property market has always been a hot topic and, following the pandemic, has become even more so. With restrictions on construction and viewings lifted, will the impacts of the last couple of years loom over the residential market for years to come?

Graham Murray, regional director, Sherry FitzGerald, says that current developments in the Irish housing market are largely shaped by the trajectory of Covid-19 within society and have been since the onset of the pandemic. "The heightened levels of house price inflation recorded throughout the country are a direct fallout from the pandemic.

“Although supply was chronically low prior to the pandemic, the repeated lockdowns needed for public health during 2020 greatly aggravated the issue, as it stopped the construction of new homes and inhibited second-hand units being brought to the market for sale,” he says.

Furthermore, he believes the prolonged lockdown in the opening months of 2021 saw a further deterioration in this situation as new homes output and second-hand listings were curtailed. However, “unlike in previous lockdowns, there was no drop off in sales activity. This combination of depleted stock and robust demand led to elevated levels of house price growth.”

Robert Whelan, managing director, Rockwell Financial Management, says that this combination of an accumulation of demands and constraint of supply was “the worst of both worlds”. He believes that the problem is set to continue as “we’re only building about 40 per cent of the numbers of properties we need per annum”.

Even throughout various lockdowns, demand remained high, says Murray. “It has been encouraging to see the consistently robust levels since the first national lockdown. This has held true across all buyer types, both in Dublin and farther afield. Many people had the time to consider their property needs and when the market reopened, sellers and buyers started to make swift decisions.”

First-time buyers remain a very strong purchasing cohort, says Murray, buying a wide variety of housing types. “This ranges from apartments to townhouses and even family homes within the second-hand market. Again, this released more buyers looking to trade up or move out of Dublin, with work from home options now being allowed by a number of employers.”

Requirements

Sarah Murray, director of customer, Cairn Homes, agrees. “What we’re seeing across our development are increases in the number of buyers. It’s really strong and increasing significantly. There just isn’t enough supply. There are more mortgage-backed buyers out there, trying especially to buy new houses.”

Covid-19 has changed more than the price of houses, she says. People’s requirements for what they want from a home have also changed, thanks in part to working from home and the need for a home office. “People are paying more attention or putting more focus on the area and where they want to move,” she says. There are inquiries for amenities, green areas and playgrounds. “People are really looking for a home, not just a house.”

She says that people are looking for spaces that are flexible and can grow with them. Whether that’s being able to convert the attic to a bedroom or an office, or utilising the outdoor space to create a “garden room” or home office, people’s needs have changed since the pandemic.

Murray agrees, citing considerable demand from “those looking to trade up to larger homes, with more internal space, work from home options, the potential to extend, larger gardens with easy access to parks, walks, seaside locations and local villages”.

One of the more challenging aspects to moving is the fear of selling and not finding somewhere to move to, especially if you are relying on selling your own home before buying, he says , However, there are many buyers in the marketplace that understand this challenge – many have been or are going through the process – and are in a position to offer flexibility around closing. “So, while it might feel that there is not a lot of available homes, once you approach the matter from a well-informed and flexible outlook there is no reason you cannot make your move happen.”

Looking to the future, he expects demand to remain high and prices to increase, but not at the same rate as previously. “The sales market was buoyant in 2021 particularly in more rural areas and the second-hand market, despite displacement because of the pandemic.

“The new homes market was encumbered by public health measures early in the year, slowing new stock coming to the market. A recurrence of this is not anticipated in 2022, meaning there should be a significant increase in new homes sales, while the second-hand market should continue to perform robustly.”

Whelan agrees, saying he doesn’t expect house prices to “skyrocket” in 2022 or 2023 the way they did in 2021. “I don’t think property prices are coming down as core construction prices have increased.”

However, he does expect to see a 3 to 5 per cent increase in property prices in 2022, but that “with the increased supply hoping to get on the market, things will be more stable in 2023”.