Housing market is expected to rebound to a near four-year high in 2019, according to new research from the National Housing Foundation (NHF).
Housing sales were down 0.4 per cent in the 12 months to the end of April, the foundation said, in contrast to a year earlier, when they were up by 0.5 per cent.
The NHF, which provides research to government, believes housing sales in Ireland have finally recovered their pre-crisis peak.
“This year we are expecting the average sale price to rise to €30,000,” NHF chief executive Stephen O’Connor said.
“With a further acceleration in sales, the price of houses could rise above €40,000 in 2020.”
While there has been some progress in recent months, O’Connors warning is not about to be welcomed by everyone in the housing market.
“The fact that prices are still below pre-collapse levels in Ireland is a testament to the resilience of the market, but I am not so optimistic that we will see the price surge to the levels that were seen in Ireland,” said Patrick O’Donnell, economist at the Centre for Housing Studies at Trinity College Dublin.
“Even if we see more sales this year, we are still likely to see a modest rise in sales prices in 2021.
The market remains highly vulnerable, and the recovery will be slower than in the past.”
Inflation and housing affordability are also expected to rise further.
The biggest factor for price growth will be the impact of the EU financial crisis on mortgage interest rates, with the Irish market currently in the midst of an “underlying bubble”.
The ECB’s recent move to raise interest rates to a new record, and a general lack of optimism in the market is also likely to contribute to price growth.
“While the increase in interest rates could spur housing demand, it will also increase the cost of purchasing a home, which will in turn drive down the price,” O’Connell said.
As the ECB and the Bank of Ireland continue to support the Irish economy, it is also clear that a strong Irish economy will be key to the recovery, with new figures showing that demand for homes in Ireland has increased by 13.7 per cent this year.