The Society of Chartered Surveyors Ireland (SCSI) says it expects national property prices to increase by an average of 5% over the next 12 months.

The forecast is a slight reduction from the 6% forecast in January, but the President of the group Gerard O’Toole, described the continuing rise in prices as "not sustainable".

According to the latest SCSI Residential Mid-Year Market Monitor, over half of agents believe the key factor influencing house prices over the next 12 months will continue to be the supply, or the lack of supply of new housing.  

Eighty-eight per cent of agents believe current residential property prices are expensive or very expensive – up 5% since January – while just 12% believe they are currently fair value.

When asked where they believe we are in the market cycle, 60% of respondents believe prices are increasing but will level off soon, while 18% believe they have peaked and should start to decline. 

Mr O’Toole said the report indicated mounting concern over the supply situation and, by extension with a recent slowdown in home construction.

“Fifty-one per cent of agents in our survey cite lack of supply as the main factor driving price inflation, up from 46% a year ago.

"In 2023, the figure was 35%, so we can really see the impact the lack of supply is having on house prices.

"At the same time, 70% of agents are reporting low stock levels of new and second-hand homes, again underscoring the persistent challenge of limited supply in the market.

“Over the past five years, more than half of agents have consistently highlighted low stock levels, stressing that constrained supply remains a fundamental issue impacting the market.

“With the ESRI forecasting that 37,000 new homes will be built this year, well short of the Government’s target of 41,000, the urgent need to address infrastructural shortcomings and for the Housing Activation Office to become fully operational as soon as possible cannot be overstated.

“The other main factors, which our members believe are influencing price movements, include the state of the economy (20%), while a further 16% said the continued availability of government support schemes such as Help to Buy and First Home Scheme are influencing house prices.

“Eighty-eight per cent of agents believe property prices are expensive or very expensive, the highest figure we’ve recorded. 

"We have had 12 years of continuous price growth, and the level of increases we have seen in recent years is just not sustainable.”

“Looking at where we are in the market cycle, 78% of agents believe prices will level off soon or have already peaked. In the medium to long term, the only way to ensure prices stabilise is to ramp up supply,” Mr O’Toole said.

The SCSI used a case study to show how it was becoming increasingly difficult for couples to buy a new home.

They listed the average house price for a three-bed semi in Meath as €482,000, Kildare €500,000, Wicklow €548,000, Cork €459,000 and Galway €485,000.

According to the SCSI, a couple on a combined salary of €107K and who have the 10% deposit and have availed of the Help to Buy Scheme along with their savings, will afford to buy in only one of the five locations - Cork.   

Buyers in Wicklow will face a shortfall of almost €65,200, Meath €5,800, Galway €8,500, while in Kildare the figure is €22,000.

Mr O’Toole said the figures show that affordability has become more challenging across various house types and locations.

“While a new three-bedroom semi-detached home is affordable in Cork and buyers with additional savings beyond the 10% loan-to-income limit should be able to overcome the gap in Meath and Galway, new three-bedroom semi-detached homes in Wicklow and Kildare remain totally out of reach for people on these salaries.

"In addition, there are thousands of people on lower salaries who will not be able to buy and will require support.”

“This year we’ve included an affordability scenario for two and three-bed terraced houses in all five locations.

"The picture here is a good deal more positive, with affordability being met in nearly all locations, although the couple would require some additional savings in Kildare and Wicklow in order to buy a three-bed terraced home.

“These findings highlight the persistent structural barrier which exists to homeownership, even for dual-income households in stable public sector roles.

"It also underscores broader concerns around housing sustainability, increasing commuter burdens and the potential impact on quality of life.

“The lack of new home building across several regions is something many members commented on in our report.

"This is something the Government needs to address through various measures, including targeted supports to unlock brownfield sites.

"If we are to move the supply dial, we also need to see compact growth targets set for local authorities with regular reporting requirements on planning approvals and completions.

“While the increased budget for housing and key infrastructural projects announced last week in the revised National Development Plan is most welcome, the success of the plan will be measured by target delivery.  That is the litmus test of any plan,” Mr O’Toole added.