Are Dublin House Prices Falling?
As life after lockdown slowly begins, the housing market in Dublin and around Ireland is getting back into gear.
But the jury’s still out on what impact the economic effects of the Covid-19 pandemic are likely to have on the property market, with the big question being: are Dublin house prices likely to fall?
Now that the country is moving into a post-COVID-19 phase, many of the estate agents in Dublin and around Ireland are bringing the shutters back up on their business.
Most shut up shop in March, due to pandemic restrictions. “Live” property showings were cancelled and sales put on hold. And while virtual viewings, 3D visualisations, and valuations online became de rigueur for some, inevitably most transactions stalled.
Certainly, as people sheltered-in-place fewer sellers were putting properties on the market.
Across the country, the number of new abodes up for sale was down 70% - the lowest it had ever been at any point in the last 14 years.
And if folk weren’t selling, less were buying. In Dublin, sales dropped 66% in April when compared to the same month of the previous year.
Yet even still, these figures didn’t appear to affect actual house prices, which if anything, continue to grow.
Figures released from the Central Statistics Office (CSO) showed prices for residential properties grew by around 1% nationally in the year to March, with prices in Dublin up 0.6%.
And while they took quite a tumble in April, nose-diving 5%, they rose on average of 3.7% in May.
So what does all this yo-yo-ing mean for the future of Dublin house prices? Certainly, there’s a lot of gloomy predictions out there for the entire country.
On the day that the CSO was declaring house prices had made a small but hopeful hike, KBC announced it expected the country’s property prices to plummet by 12% this year.
It envisioned a rise of 8% in 2021 followed by 5% in 2022.
Worst Case Scenario
The lender also laid out a worst-case scenario in which house prices could fall by 20%, with a further decrease of 5% in 2021, before a 3% recovery in year three.
The Economic and Social Research Institute (ESRI), backed up KBC’s predictions with their own warning that property prices around the country could take a 12% dunk by the time we were ushering out the year.
KBC claim that their forecasts are modelled on a typical correlation between a GDP drop and property prices. And certainly, with almost 600,000 workers losing their jobs as a result of the COVID-19 pandemic, few will be in a position to buy a new home.
For Dublin house prices, which started 6.3% higher in the first three months of this year than it did in 2019, a 12% slice off the sale price would result in an average family home tumbling from a January 2020 €438k price tag to under €390k.
Good News for First Time Buyers
This could obviously be good news for buyers, particularly first time buyers who don’t have a current pad to shift.
However, it doesn’t bode well for those hoping to sell, and it might deter people from even going ahead and putting their place on the market.
And, as we looked at in the key factors affecting houses prices, if there are fewer houses to sell, and demand starts to outstrip supply, the result could see a reverse of what’s being predicted - property prices could continue to rise instead.
In the Dublin market, this is particularly likely as even before COVID-19 hit, supply wasn’t meeting demand.
Prices Rising in Dublin Commuter Areas
In addition, sale prices in other areas of Leinster are currently 2.1% above levels seen a year ago, possibly indicating that the desire for homes in the Dublin commuter belt hasn’t diminished even as the economy has deteriorated.
AIMA: No Big Prices Drops for Dublin
In a break with the ERSI and KBC’s bleak outlook, the Irish Association of Mortgage Advisors (AIMA) claim that a big price drop in Dublin is not on the cards.
They suggest that the significant shortage of homes for sale that existed pre-COVID-19 will be exacerbated further as people start finding their feet in the new normal.
That’s because the closure of building sites during the pandemic will have put a strain on the Irish government’s target of 25,000 new builds in 2020 (which in itself was way below the Central Bank’s directive that 34,000 new builds are needed per annum).
Dublin alone downed tools in 185 active building sites. And though construction workers were one of the first groups allowed back to work in phase 1 of restarting the economy, the various health and safety measures that were needed to be put in place for them to do so have inevitably increased costs and slowed building.
Dublin Economy May Recover Faster than Rest of Ireland
Also, the Dublin economy may recover faster than the rest of the country.
It is home to several multinational corporations, including "hi-tech" sectors such as information technology, digital media, financial services and the pharmaceutical industry, most of which provided relatively financially secure jobs during the COVID-19 pandemic.
And new jobs are already being discussed for the city. Mastercard, for example, said it intends to proceed with plans to create 1,500 jobs in Dublin over the next three to five years despite the COVID-19 crisis.
All of this points to a quicker recovery of jobs and incomes in the capital, both of which will support a return to consumer confidence.
In other words, people who planned to sell or buy properties before the pandemic may return to the market sooner rather than later, keeping house prices in the city buoyant instead of bottoming out.
So, to return to the question on everyone’s lips: are Dublin house prices falling? The answer is, at the moment, no. And, there is a possibility that in the capital at least, we won’t see property sliding to recession-era prices.
However, if we’ve learnt anything this year, it’s that situations can change completely over weeks and even days. Certainly, that has been the case for the property market which has been on something of a rollercoaster these last four months.
We can only hope that there isn’t a reoccurrence of COVID-19 and that the government’s de-escalation measures continue to keep Ireland on the path to economic recovery.
And if you’re looking to buy in Dublin, this might just be the time. We’ll never forget COVID-19, but, right now, it looks like the city’s housing market is moving on with business as usual.
If you’re currently on the hunt for a home in Dublin why not check out our wide range of properties in Dublin here.