Sherry FitzGerald, Ireland’s biggest estate agency, anticipates that “moderating forces” will take effect mid 2022, as house price inflation tapers. This is as increased supply and a probable interest rate hike “cool the market.”
In the view of Eoin Lynch, the company’s chief economist, it is likely that the European Central Bank will start to hike interest rates later this year, which will increase borrowing costs, dampening demand in the process. Also, “new listings in the second-hand market are recovering towards their pre-pandemic levels and the heightened level of commencement activity over the past 12 months should help see some improvements in the level of supply currently available. All these factors have the potential to coalesce to reduce the current heightened rates of inflation,” he comments.
The company’s most recent quarterly report indicates that heightened levels of price growth are prevalent across the State and will persist for much of this year as supply shortages and pandemic-related factors continue to stoke prices.
Their statistics, drawn from a basket of listed properties, show that headline inflation was running at 11.1% year on year in the first quarter and at 9.6% in Dublin.
It appears that lower valued properties have recorded the largest increases in the rate of growth and Sherry FitzGerald predicts that price growth will average at 8% in 2022. Lynch adds that, “the supply horizon is much more favourable in Dublin at present, both in terms of commencements and granted planning permissions, notwithstanding the potential effects of judicial reviews. This will likely lead to a continued divergence in price and rental growth in and outside the capital, as witnessed in recent times.”
Sherry FitzGerald found that housing sales in 2021 almost fully recovered to their pre-pandemic levels, with the second-hand market at its most active in over a decade.