Munster property prices predicted to rise 7% over the next 12 months.
Lack of supply, pent up demand, and the availability of saving and fixed rates on mortgages are seen as factors supporting the recent house price growth in the residential property market.
The pandemic meant people were slow to put their property on the market with so much uncertainty, all the while, buyers were looking, they still needed a home and wanted to buy. That left a greater shortage of property and prices moved on.
The restrictions in place during the lockdown earlier this year, meant that people were bidding on property without having an opportunity to view it until the sale was agreed. Once physical viewings recommenced in May, the market was very busy with a large number of approved bidders going head-to-head with one another to secure scarce housing stock, and further driving up prices. Many house sales in the Cork residential market have gone for 10% or more over their guide prices, while coastal properties with sea views prices have increased by over 20%.
First time buyers continued to be the main players availing of the help to buy scheme to purchase a new home, while other buyers know they can make savings by buying new. Banks are offering green rates on mortgages for energy efficient homes. However, the problem here is there is not enough supply to meet demand as the covid 19 pandemic halted construction on many new developments. Extending the Help to Buy Scheme to include second hand homes may help the supply issue here. Since sites reopened and construction recommenced, builders are now faced with a number of challenges including: increase of construction costs where materials are estimated to have gone up by 20%, increase in labour costs and the scarcity of trades people. These factors are creating a lot of uncertainty for builders and many report they are revaluing the viability of each scheme due to rising costs.
Stock in the second-hand market is at an utmost low. 84% of agents report having low levels of stock available to sell on their portfolios at present. One of the main reasons people are delaying putting their property on the market is they cannot find an alternative home due to the shortage of stock in the market. Cash buyers are active seeking coastal cottages and doer upper projects.
Buyer’s preferences for homes have changed in the last 18 months. Location is no longer the key requirement. As a consequence, we continue to see more demand for property in rural areas with large gardens and good broadband. We are seeing buyers from Dublin looking to relocate to Cork as flexible working conditions continue to be the norm. Furthermore, they can sell their semi detached in Dublin and replace it in Cork with a larger home thus getting better value for money. The increase in Irish interest in West Cork properties, coupled with the drop off in overseas purchases, has changed the market significantly.
There is a large section of the market for which the pandemic has not affected their wages and these tend to be those on the higher income brackets and this has allowed people to save on their household expenditure and they can then afford a bigger mortgage.
Ready to go buyers continue to go head-to-head for homes driving up prices. Pent up demand, shortage of supply, rising costs of construction, are signs of further price increases.