More bad news for first-time buyers as a recent forecast from the Banking and Payments Federation Ireland (BPFI) says it doesn’t see supply catching up with demand until 2024 at the earliest.
Over the last few years, house prices have risen to near Celtic Tiger levels with the average price of a home in Dublin approaching €400,000. Nationally it has risen to €262,500. This is all being put down to the chronic shortage of supply in the housing market. In combination with these obvious supply issues, people are finding it more and more difficult to get approved for mortgages due to strict lending rules implemented after 2008.
Other factors contributing to the rise in prices is a rise in input cost due to soaring construction material costs & shortages as a result of Brexit and the Covid-19 pandemic restrictions around the world.
All of this adds up to an unfortunate situation whereby the average age of a first-time buyer in Ireland has risen from 31 to 34 years of age. Also, as a consequence of higher interest rates, the average first-time buyer here will be paying on average €2,300 a year more than their European counterparts.
The BPFI is expecting about 21,000 housing units to be built this year which is similar to last year. Prior to the pandemic, they had forecast that annual completions would reach 30,000 units by the end of 2022. However, they have now reevaluated and said it will be at least the end of 2024 before we reach that point.
For the investors out there, this can only mean prices should remain stable at the very least. Until supply can meet the demand prices will inevitably rise, as more and more people try to snap up what little is available.
As always you should not take any of the information in this article as financial advice. Always speak to a professional before you consider any financial investment.