Key Predictions for the Irish Property Market 2022

Key Predictions for the Irish Property Market 2022

Property Market

The pandemic that started in late 2019 threatened to bring the Irish property market to a standstill. But while 2020 was rocky and 2021 had a slow start, over the last 10 months, Irish property prices have soared, interest rates have shrunk and new property hotspots have popped up outside the Dublin city limits as more people moved to remote working.


But what does this mean for the next 12 months? Read on to find out whether our predictions for 2021 were on the nose and how they’ll impact the Irish property market in 2022.


Milestones in the Property Market in 2021


Our 2020 property market predictions highlighted the lack of housing supply, a fall in house prices, a rebounding economy and long-term changes in how we live as the key issues.


Lack of Housing – Or Maybe Not?


Unsurprisingly, we predicted that the scarity of new dwellings coming on market would remain the dominant concern. This shortage wasn’t helped by the cessation of construction work at various junctures across the last 18 months, courtesy of COVID-19 restrictions.


Yet, all that said, construction activity sharply improved once it was all hands on deck again from May 2021. A report from the Banking and Payments Federation of Ireland (BPFI) in September showed that work on almost 27,300 units had begun in the twelve months ending June 2021, which they stated, was the most in any period of that length since the twelve months ending October 2008.


Additionally, the report stated 8,955 houses were completed in the first half of the year, which was a 10% increase on the equivalent period of the previous year and only 1% down from the same period in pre-pandemic 2019.


Price Plunge? Yeah, Not so Much


2021 began, as predicted, with Irish property prices continuing to hold steady. But the lack of new stock in the early part of the year along with a rise in demand as buyers who’d stayed put in 2020 began getting itchy feet mid-2021, saw asking prices start to soar.


Low interests rates also helped push prices upwards and in the second quarter, prices jumped 13%  compared to the same period 12 months previously. 



A Stronger than Expected Economic Recovery


There was a lot of hand-wringing over the economy in the early part of the year, but we predicted that it would rebound even while there would still be issues of concern.


These would include ongoing unemployment particularly in pandemic-affected sectors such as hospitality and tourism, along with the possibility of fresh lockdown measures if we experienced a new wave of the virus.


According to the Central Bank’s Quarterly Bulletin published in October 2021, the country’s domestic economy looks set to return to pre-pandemic levels of output by the close of the year.


With over 90% of the adult population vaccinated, confidence is growing and the Bank expects domestic demand to grow by 5.5% this year. Of course, the recent arrival of the Omicron variant on Irish shores could derail the economy’s recovery if it prompts a new round of tough restrictions.


Long-Term Changes in How We Live …And Work


The fact that earning and learning remotely became how we worked and went to school in 2020 and much of 2021 greatly impacted the housing market.


We predicted that people would continue to move away from the cities towards less expensive, more attractive commuter areas as they sought to re-establish a work/life balance, and we weren’t wrong.


Our November 2021 Property Market Report showed that Dublin house prices dropped by 7% in the last 12 months while prices in the rest of Ireland rose by 11% as a result of the exodus from city to country.


4 Key Predictions for 2022


So how will what happened in 2020 & 2021 influence 2022 and what are the key issues predicted for this year's Irish Property market?


Well, to paraphrase Led Zeppelin, much of the song remains the same. The lack of new and second-hand homes on the market will continue front and centre as the primary concern and this will affect many of the other key 2022 predictions, which are as follows:

  1. More Houses Will Be Built But Demand Outside Dublin Increases Further
  2. Prices Continue to Rise Pushing Younger First-Time Buyers out of the Market
  3. Economic Growth …But We’re Not Out of the Woods Yet
  4. The Pandemic Will Loosen its Hold on Our Lives – But Our “New Normal’ will Remain

2022 Irish Property Market Prediction #1: More Houses Will Be Built But Demand will Continue to Grow


The housing crisis has been a key social issue for people in Ireland for several years. In pre-pandemic 2019, a Central Bank study discovered that 34,000 new homes would be needed each year for the next decade to keep up with the housing demand. That target has not been met, and demand has continued to outstrip supply.


In June of 2021, the Economic and Social Research Institute (ESRI) stated in a report that the Irish Government could help to solve the housing crisis if it borrowed an additional €4 billion to €7 billion a year. The Government followed their advice by launching ‘Housing for All’ in September, which sees them allocating €4 billion per year up to 2030 to deliver the number of homes required. 


The new plan projects that 300,000 new homes will be built by the end of the decade. That evens out to over 33,000 homes per year, which the plan says will rise to 40,000 by 2030.


Over half of these new builds will come from the private sector. The remaining properties will be made up of 90,000 social homes, 36,000 affordable homes, and 18,000 cost-rental homes.


Buyers Persisting in Purchasing Outside Dublin


However, if the economy continues to grow and interest rates remain low, demand will continue to rise. Furthermore, if buyers persist in looking beyond the major cities for homes to call their own, this will put pressure on the markets in areas where availability is already scarce, pushing up property prices as a result.


According to experts, buyers are involved in a “race for space”, looking to snap up larger family homes to live and work in commuter towns and easy to access rural areas. According to Perfect Property’s November 2021 report, buyers want dwellings with certain lifestyle features including a nice view, beachfront or countryside access or a comfortable degree of privacy.



2022 Irish Property Market Prediction #2: Prices Continue to Rise Pushing Younger First-Time Buyers out of the Market


In 2021, first-time buyers, many of whom had managed to save money for a deposit during the pandemic, were one of the most active groups in residential property purchases in Ireland.


This was particularly noted in commuter towns and more populated rural areas, where it was driven by the remote working structures that many businesses put in place as a result of the pandemic.


However, who that first-time buyer is has changed over the years; the average age has risen by five years to 34 over the past decade.


And as this category continues to age, the dream of owning a home of their own will become less attainable for many in their 20s. According to Real Estate Alliance (REA), first-time buyers in their twenties and early thirties are now largely absent from the market for properties with a price tag of €160,000 or more.


The main driver of rising home prices is the current low stock, but, as noted above, the biggest price increases have been outside Dublin.


The average Dublin house price fell by nearly €39,000 from €530,130 to €491,317 in the year to November. While in the rest of Ireland house prices rose from an average of €214,777 in November 2020 to €237,389 in November 2021.


RELATED: First-Time Buyers Are Currently Buying Homes in these Irish Hotspots


Yet, many of the newly popular areas are in short supply, which means that the upwards price push is unlikely to slow down in the next 12 months.


According to the latest report from financial firm, Goodbody’s, home-hunters can expect 2021 to have finished with a price-rise of 12.5%, followed by a further 5% hike in 2022 and 4% in 2023.


Their figures show that this adds 22.5% to the cost of an average home in Ireland, which already boasts a national average price of €331,792.  


As the Central Bank of Ireland’s rules limit the maximum amount someone can borrow to 3.5 times their annual income and insist on a minimum 10% deposit, that means that first-time buyers will need a salary (or a combination of two) of over €90,000, plus a deposit of at least €34,300 just to buy a standard family home in Ireland – all of which signals a further retreat of younger buyers or those earning an average salary from the market.


Government’s Shared Equity Scheme


However, it’s not all doom and gloom for hopeful homeowners. Late November 2021 did see the Central Bank giving the go-ahead for banks to participate in the Government’s proposed Shared Equity Scheme for first-time buyers.


A key pillar of the Housing for All project, the Shared Equity Scheme allows first-time property purchasers who can’t afford a new build up to and including certain capped prices to apply for the State to take up to a 20% equity stake in the home.


This stake is free for the first five years with a cheap interest rate from then on. And while many warn that this may lead to property price inflation in the short term, it is presumed that in the long-term inflationary pressures will dissipate.


Extension of Help to Buy (HTB) Scheme


In Budget 2022, the Government also announced an extension of the Help to Buy Scheme until 31 December 2022. This scheme, which is available to first-time buyers of new or self-built residential property that cost €500,000 or less, offers a refund of income tax and DIRT paid over the previous 4 tax years.


The maximum relief available was temporarily increased during the worst of the pandemic in July 2020 and enables those eligible to claim relief on the lesser of:

  • €30,000
  • 10% of the purchase price of the property
  • 10% of the completion value of a self-build
  • The amount of income tax and DIRT you paid for the previous 4 years.


2022 Irish Property Market Prediction #3: Economic Growth …But We’re Not Out of the Woods Yet


Other good news for 2022 is the prediction of Ireland’s continuing economic recovery from COVID-19. In their last quarterly report of 2021, the ERSI forecast that the year would end on a strong and "unprecedented" domestic growth of 5.5% followed by a growth of just over 7% in 2022.


The robustness of Ireland’s recovery points to a decrease in the country’s deficit in the public finances, bringing it down to just under €10 billion in 2021 and to €4.8 billion next year the ERSI says.


As the economy normalises, unemployment figures are set to drop to 5.9% on average by 2023 with 160,000 new jobs created in the period.


The Effect of Supply Chain Delays and Rising Inflation


However, we’re not fully out of the woods yet. The current issues of inflation, energy costs, the rising costs in building materials and delays in supply chains continue to be causes for concern.


Product shortages not only frustrate consumers and hike up the prices in several industries, but they contribute to inflation. As a result, the ERSI claims that inflation is expected to keep on rising in early 2022, peaking at around 6% in March 2022.


But the higher the inflation rate, the more likely interest rates will increase. Lenders, after all, will be looking to recover losses in the purchasing power of future payments.


The average interest rate on a new mortgage in Ireland was 2.73% in October 2021, which is historically low for this country (though when compared to the euro area average of 1.28% it’s not so admirable and, truth is, Ireland has the second-highest interest rates across the Euro area).


However, even with a current low rate, a 1-2% push upwards could still price potential home-buyers out of an already expensive market.


2022 Irish Property Market Prediction #4: The Pandemic Will Loosen its Hold on Our Lives – But Our “New Normal’ will Remain


Our final prediction for 2022, is that the Coronavirus’s hold on the country will start to loosen but the changes to how we live and work will remain.


The idea of the virus’s loosening grip may seem optimistic in the face of the rising cases of the omicron variant as reported in late 2021. Yet, the fact is, that over the last couple of years Ireland has settled into a “new normal” that includes dealing with the uncertainty of virus mutations and living with the constant presence of COVID.


And while COVID will not become less dangerous, experts do say that by the end of 2022 the pandemic is likely to be over when the virus has become an “endemic illness”.


So, what does this mean for Ireland and specifically the Irish property market? The arrival of coronavirus in Ireland completely changed how many of us work as the majority of businesses moved quickly to a remote working business model.


Research revealed that across the world, working remotely had an overall positive impact on employee experience, and in Ireland, the latest National Remote Working Survey shows that 95% of those who could work remotely were in favour of continuing on an ongoing basis for a couple of days a week at least.


Though 2022 will see a gradual return to the office for some, others will continue to avail of a hybrid working model that may involve commuting to their work’s physical space a couple of days a week or month.


The impact of this on the Irish property market will mean that homes outside Dublin and other major urban centres in the country will continue to attract buyers.


Indeed, as living near the office is not now a priority for many, this fact alone will continue to allow buyers the chance to opt for more affordable homes (for the time being) that include greater living space often with a home office and a garden, as well as access to a healthier, outdoor lifestyle.


However, while this might see prices in Dublin levelling out, it may continue to prompt the rise in prices in other areas of the country, particularly commuter towns, which are already witnessing overheated markets thanks to low stock and great demand.


As it is, the average property price in Meath, Kildare and Louth had climbed 10%, 11% and 20% respectively in the 12 months to November 2021. If these rises continue, the dream of country living may turn into a nightmare for many.





So, to recap, the future looks bright for the country as a whole with the robust economic recovery of 2021 continuing into 2022.


However, though the hearty economy will prompt people to enter the property market, many will still not be able to afford the ever-rising price tags on Ireland’s homes.


The age of first-time buyers has risen to age 34 and continues to rise in tandem with property prices. This has pushed many younger people out of the market as affordable houses under the €160,000 price mark are far and few between.


Though the Government have announced an ambitious plan to build more houses over the next decade, 2022 is still too early for this to affect property prices. They’ll continue to rise along with demand.


And it won’t just be homes in the cities that buyers will be vying for. The coronavirus has changed the way we think about how we work and live and many people will continue to look to the countryside or coast for larger homes where they can work remotely and raise their families safely.