A KBC Bank consumer sentiment index report has uncovered the scale of the effect on the housing market of savings amassed during the Covid period.
The findings are that it is likely to be adding around five percentage points to house price inflation. Figures from the Central Statistics Office show that property prices shot up by 14.4% nationally last year.
In a question survey it was established that one in 10 respondents who built up pandemic savings will use the money to fund an investment in housing or education.
An additional report also shows that there has been an increase in the number of first-time buyers getting mortgage approval and a big rise in those switching their home-loan provider.
KBC Bank economist Austin Hughes thinks that this it’s likely that a big chunk of pandemic savings money was being held in bank accounts to be used as deposits for property purchases by would-be homebuyers. “On fairly crude mechanical assumptions, the various elements of these responses might imply home-buying power has been boosted by something in the region of €1bn,” he said.Top of Form
He added that it could be inferred the additional savings realised during the pandemic could be adding around five percentage points cumulatively to Irish house prices.
Anxiety about the pandemic, Brexit, and the risk of military conflict in Europe have prompted 17% of respondents to the survey to say they intend holding on to additional savings for ‘rainy day’ purposes.
Hughes’ view is that the increased importance of precautionary savings may be a lasting legacy of the volatile economic environment of recent years.
LSL News.