House prices will rise by a more moderate 5% in the coming year, says the Society of Chartered Surveyors Ireland, a welcome slowing from rates in both 2021 and 2020.

The SCSI’s Residential and Outlook Report found that nine out of ten survey respondents expect property prices to increase over the coming 12 months, 9% expect prices to remain the same, and 2% expect a decrease.

Last year the respective figures were 68%, 24% and 8%. 

Surveyors expect that low levels of new housing supply, pent-up demand due to Covid-19, and pandemic savings will all fuel an increase in property prices of up to 3% in Q1 before levelling off.

The report found that surveyors  expect rents to rise by up to 5% this year, with respondents saying that overly complex and restrictive rent legislation is the main reason smaller landlords are leaving the rental market.

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SCSI president TJ Cronin (pictured) commented: “Our survey shows the key factor affecting property prices all over the country is the low level of new housing supply. In Q4 2021, 85% of agents reported having low levels of stock available for sale. In three surveys that figure has not dropped below 81%.

“Following lockdown 3, we can see now that the market experienced something of a frenzy from April to July 2021 with competitive bidding and high sales prices pushing the annual rate of inflation up to 14%. While this was good news for vendors, many well-funded buyers found themselves priced out of the market.

“Although the market slowed in Q4, our members are predicting a 3% increase in prices in the first quarter as new buyers come into the market. They believe the rate of inflation will then moderate to a median of 5% nationally for the year. However, in Connacht/Ulster where prices are comparatively lower, agents are predicting a 7% rise in prices.” 

According to the CSO, the median price of a home in Dublin is €400,000, so a 5% increase here means an increase of €20,000. 

Cronin added that a chronic lack of supply, similar to the sales market, was also the critical factor affecting the rental market, with the continued departure of small and medium sized landlords a worrying trend. 

The survey also found that, due to Covid and the increase in people working from home, the demand for larger properties in rural locations with good broadband remains strong.

There was also anecdotal evidence that demand is growing for one-off properties, especially those located in coastal locations. Some respondents said prices for such properties increased by up to 20% last year. 

The SCSI’s Annual Residential Property Review and Outlook Report 2022 is available here or on request.