Robert Gardiner, Director and Senior Negotiator of Auctioneera Estate Agency, analyses the Irish property market for the year ahead.

The legendary investor Charlie Munger once quipped that the best time to buy a property is when you need one.

While there is some wisdom in this, in this article we look to the year ahead and how the property market is shaping up for 2025.

Prices are only Going in One Direction

Those hoping to get on the property market in the year ahead are no doubt hoping for some softening, or ideally a crash, in house prices.

This mirrors the Irish political landscape where homeowners vote FFG and non homeowners vote SF i.e. once you own a house, your concerns about solving the housing crisis dissipate somewhat as rising prices strengthen your personal balance sheet.

Supply Remains Sluggish

Unfortunately for aspiring homeowners, prices are predicted to only be going in one direction in 2025.

This is because demand will outstrip supply again in the year ahead as it has done for the last number of years.

On the supply side, the construction industry has never recovered from the collapse of 2008.

The volume of skilled workers who left the industry either through emigration, often back to Eastern Europe, or by moving to another industry as work dried up in construction, was never repaired.

Anyone who has tried to find a tradesperson recently will realise how scarce skilled labour is in the construction sector.

With the Irish economy at full employment, this shortage isn’t going to be ameliorated in the medium term, let alone next year.

Layer on top of this the flight of capital from the private rental sector owing to an increasingly hostile regulatory environment, ongoing planning issues and constraints in connecting sites to services owing to underinvestment in infrastructure, the industry is struggling to get to even half of the 90,000 units that were built in 2006, now almost two decades ago.

Completions for this year look like they might nudge north of 30,000 and while the circa 65,000 commencement notices this year are a positive sign, completions for next year are not projected to be anywhere close to this level, as developers rushed to serve commencement notices to avail of development levy waivers.

In short, supply is inching upwards but is still nowhere close to satisfying demand.

Demand Ain't Going Away

On the demand side, all indicators point to continued growth.

Inward migration continues apace owing to the strong performance of the Irish economy, high wages and full employment.

Those in rental accommodation will be desperate to get on the property ladder to avoid the record high rents in the sector owing to the flight of landlords and investment mentioned previously.

The post Covid rate hiking cycle is now very much over with inflation back under control and the European Central Bank under pressure to stoke demand in the sluggish German and French economies.

As many as five rate cuts are predicted for next year with rates bottoming out at as low as 2% by the end of the year according to some market analysts.

As rates fall, the same monthly mortgage payments will cover a higher loan value and this increased firepower will be directed towards the housing market in the form of bidding wars.

With rates this low, yield-starved investors may even start to dip their toes back in the market.

With Revolut expected to enter the mortgage market in the year ahead, would-be home owners can be assured that rate cuts will be quickly passed through as the lenders compete for market share.

If all of this wasn’t enough, pro-demand Government measures such as Help to Buy and the First Home Scheme are not only not being phased out but are expected to be extended into the second hand market, from currently only being available to those buying new properties.

Fine Gael’s manifesto even pledged to increase the HTB cap from €30,000 to €40,000 which will add yet more fuel to the fire.

In short, demand will only strengthen in 2025 and supply will struggle to keep pace.

With no softening in sight for as far as the eye can see, it looks like Munger was right after all - the best time to buy a house is when you need one!