Covid-19 has aggravated Ireland’s property woes. It has halted construction twice, limiting the supply of new homes which was already lagging demand before the pandemic hit. The number of new housing units constructed this year is expected to be in region of 20,000, but the Economic and Social Research Institute estimates the level of demand to be around 28,000.
In addition, the spike in unemployment caused by the restrictions has not damaged demand to the extent that most had predicted. This is because the majority of those directly impacted have been in low-paying sectors, and therefore not in a position to buy. When the restrictions on viewing were lifted last summer and general activity in the selling end of the market resumed there was a bounce in activity, which firmed up prices.
But there is another driving force. One that we had not forecast. Expats, either because of Brexit or Covid, have fast-tracked plans to come home and buy. This has led to increased buying activity, particularly at the upper end of the market.
According to property agents Knight Frank, expats normally make up about 5-7 per cent of the Irish market, but in recent months this has jumped to 25 per cent.
It is tempting to link that to an exodus from London’s high-paying financial district, but the evidence is only anecdotal. While many agents say residential prices have risen in 2020, we’ve yet to get the official figures. The latest CSO-compiled Property Price Register, which is based on actual sales prices rather than valuations, comes out today, albeit for the year to November. While prices were down year-on-year in October, they had begun to rise on a monthly basis and the November figures are expected to reflect more of this trend.
In years to come it may be that the Covid impact on property prices will be broadly positive, and that 2020 and 2021 will merely reflect an extension of the trend we’ve seen in recent years.