A lack of new apartments is making Ireland's 'dysfunctional' property market even worse
New figures show the average asking price for a home in Dublin has jumped by €145,000 in five years.
TOO FEW APARTMENTS are being built in Ireland, exacerbating supply problems in the country’s “dysfunctional” property market, according to economist Ronan Lyons.
His comments came as the latest Daft.ie house price report, released today, showed that the average asking price for a Dublin home has surged €145,000 in the past five years.
List prices in the city hit an average of €368,356 in the first quarter of 2018, up 8.4% on the same period a year earlier.
The rate of inflation in the capital was much higher than in the cities of Cork, Galway or Limerick, where average asking prices were up 1.7%, 3.1% and 3.7% respectively in the past 12 months.
Outside the cities, there were significant price increases in most counties, with the exception of Donegal, where list prices dropped 2.1% during the year.
Properties in Dublin were typically selling for a further 5% above their list prices, compared to 2.9% in other cities and 0.3% in Munster as a whole, the report said.
Trinity economist Lyons, the Daft report’s author, said the reasons for the price rises were simple, that “the growth in demand far exceeds the growth in supply”.
While in a healthy housing market new supply would follow quickly after new demand, Ireland’s residential sector was clearly “dysfunctional”, he said.
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The report, which is based on properties listed on the website in March, said there had been a significant increase in the number of homes for sale in Dublin compared to a year earlier, but that was being offset with a fall in stock outside the capital.
Lyons said in addition to the pressure on housing stocks from Ireland’s rising population, there was the “century-long process” of the country shifting from a mostly rural society to a largely urban one.
With this came had come a reduction in household sizes – from four people per home to closer to two – which had “huge implications for what we build and how”, he said.
“Supply will be needed in and around the cities – and predominantly in apartment form. What is clear is that this is not happening.”
Out of the approximately 20,000 dwellings approved in 2017, only a little over 5,000 were apartment permissions, Lyons added.
Earlier in the week, Investec economist Philip O’Sullivan said the country’s chronic lack of housing was Ireland’s “most pressing issue”.
He said it would be “a number of years” until homebuilding reached the level needed for the 30,000 to 50,000 new households thought to be forming each year, much less “put a dent” into the already unmet need.
Note: Fora publisher Journal Media Ltd has shareholders in common with Daft.ie publisher Distilled Media Group.
