Housing in 2021: Unprecedented scarcity

Irish house prices rose by 7.7 per cent on average in 2021, a similar rate of inflation to 2020, but significant regional differences have also begun to emerge.

The latest Daft.ie figures show that housing prices rose by 7.7 per cent throughout the year 2021, reaching a price average of €290,998. This average was an increase of 0.6 per cent on the third quarter of 2021 and 21 per cent beneath the Celtic Tiger peak of house prices.

Notable among the figures for 2021 is the emergence of significant regional differences, with the smallest increases in prices being recorded in urban areas. Prices rose by 1.6 per cent in Galway city, 3.4 per cent in Dublin, 5.5 per cent in Cork city, 6.4 per cent in Limerick city and 7.5 per cent in Waterford city, but the areas outside of cities saw average increases of 11.5 per cent.

The largest increases were record in Connacht-Ulster (outside of Galway city), with increases of 14.6 per cent recorded for the year. Excluding Dublin, Leinster prices rose by 11.9 per cent and excluding the cities, Munster prices rose by 9.2 per cent.

This price inflation has in part been blamed on a lack of supply that has only been exacerbated by the pandemic; fewer than 11,500 homes were listed for sale on Daft.ie on 1 December 2021, the lowest total recorded since July 2006 and a 25 per cent decrease year-on-year. However, the 12-month total for properties advertised for sale on the same date was 54,000, the highest 12-month total since early 2020, but still below pre-pandemic levels of almost 70,000 homes.

With a lack of supply in the private market, those looking to the public sector for relief will have been disappointed by the January 2022 publication of a National Oversight and Audit Commission report that found that the State’s social housing portfolio had risen by less than 10,000 units from 2017 to 2020.

The rental market also experienced “unprecedented scarcity” in 2021, with an all-time low of homes available for rent recorded in both Daft’s third and fourth quarter rental reports. Just 1,460 homes were available to rent on the website on 1 November 2021, which dropped to 1,397 on 1 February 2022 in the fourth quarter report. This lack of supply caused a 10 per cent increase in rental prices on average across the State, marking the 37th consecutive quarter where rents were higher than they had been 12 months previous and the highest rate of inflation since early 2018. Again, these increases were felt most acutely outside of urban areas, with counties Mayo and Roscommon experiencing year-on-year average increases over 20 per cent, and Donegal and Leitrim recording increases of 24.3 per cent and 24.8 per cent respectively.