Lockdown drives house prices up in first quarter

House prices rose during the first quarter of the year as lockdown measures negatively impacted the available stock of properties for sale throughout the country, according to estate agent Sherry FitzGerald.

The average value of second-hand homes increased by 1.5 per cent in the opening three months of 2021. This compares with an increase of 0.1 per cent in the first quarter of 2020.

Furthermore, prices increased by 2.5 per cent in the 12 months to the end of the first quarter.

In Dublin, prices increased by 1 per cent in the first quarter, compared with the 0.03 per cent recorded in the opening quarter of 2020.

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Price growth in Dublin was more muted compared with the rest of the country, with Dublin recording the lowest level of growth of any region in either the past quarter or year. Average values have increased 1.5 per cent in the capital over the past 12 months.

Outside Dublin, average values increased 2.2 per cent in the three months to the end of March and increased 3.9 per cent over the past 12 months.

Sherry FitzGerald managing director Marian Finnegan said lockdown measures designed to curb the spread of Covid-19 continue to weigh on the Irish housing market.

“The tightening of restrictions since the start of the year has temporarily limited the market’s ability to replenish supply,” she said. “This has resulted in a rise in price inflation compared to the more subdued levels of growth observed last year.

“That said, it is anticipated that the supply of second-hand property will improve once restrictions are lifted, which should facilitate a stabilisation in the pace of growth as the year progresses.”

‘Very robust’ activity

Transaction activity was described as “very robust” in the closing months of 2020, with almost 16,900 home sales recorded in the final quarter of last year. This was the strongest level of quarterly sales in more than a decade.

Overall, just under 46,200 home sales were recorded on the Property Price Register (PPR) in 2020, excluding multi-family/portfolio sales and new homes acquired for social housing.

Although representing a 16 per cent fall year on year, this decrease was not as large as once anticipated. Due to the time lag in adding properties to the PPR, fourth-quarter data is the most accurate available.

Dublin noted the largest reduction in transaction activity nationally compared with 2019, with about 13,500 dwellings transacting in the year, a fall of 22 per cent.

The regional centres of Cork, Limerick and Galway all noted similar levels of decline of about 16 per cent year on year.

Activity levels in the new-homes market suffered a greater decline than the second-hand market. About 7,600 sales of new homes were recorded, a decrease of 20 per cent year on year, with new home sales falling by 33 per cent in Dublin.

In contrast, there were about 38,600 sales in the second-hand market, a reduction of 16 per cent annually.

Location preference

There are early indications that Covid-19 may be causing a shift in buyer preference in terms of location.

Nationally, 20 per cent of vendors who sold their homes through Sherry FitzGerald in the opening quarter of 2021 said their reason for selling was to relocate somewhere else in the Republic, up from 15 per cent in the same period in 2020.

Owner occupiers continue to be the primary cohort of buyers, representing 79 per cent of all purchasers in the first three months of this year, with first-time buyers accounting for 54 per cent of all owner occupiers.

The volume of investors leaving the market continues to substantially outweigh those entering the market. Almost 29 per cent of vendors were investors selling a property, whereas just 13 per cent of investors were purchasing a property.