Confidence in housing market rises due to high rental prices

CONFIDENCE in the housing market rose this month as a result of high rental prices.

This has bucked the trend of Ireland’s economic ‘pulse’ which has hit a new low amid coronavirus and Brexit worries.

The Bank of Ireland Consumer Pulse report released yesterday found that one in ten of those surveyed plans to buy or build a home over the coming year.

Some 35% expect house prices to go up over the next 12 months as people know ‘buying continues to trump renting’.

Indeed, three in four think it is cheaper to buy than rent in their area when the typical monthly mortgage repayment and the typical monthly rent for similar properties are compared.

Households in Leinster and Munster were a little more positive than elsewhere about the outlook for house prices. The bank’s housing pulse measurement went up to 64.8 this month – two points higher than last month’s reading but down 8.5 on a year ago. But overall, the economic pulse came in at 56.6 – down 8.6 on last month and 20.5 lower than 2019.

The ‘pulse’ – which combines the results of consumer and business sentiment surveys – marked a new low for consumer sentiment while businesses downgraded their near-term expectations for activity and jobs. October was the weakest reading on record for the Consumer Pulse.

Bank of Ireland’s chief economist, Dr Loretta O’Sullivan, said: ‘The economic pulse dropped sharply in October, with both consumer and business confidence well down on the month. This is disappointing but not surprising given the backdrop to this month’s survey.

‘ Heightened Covid a nd Brexit uncertainty saw households and firms pare back their expectations for the economy, business activity and jobs, and with Level 5 restrictions now imposed, the growth outlook for the fourth quarter of the year is challenging.’

The survey of 1,000 households and 2,000 businesses was carried out by Ipsos MRBI on behalf of Bank of Ireland. The twin threats of the pandemic and Brexit were highlighted as the areas of greatest economic concern, with the whole country moving to Level 3 at the time the survey was carried out, while tensions with Britain over future trading arrangements with the EU were coming to a head.