Rising prices of homes fuelled by ‘boomerang buyers’: experts
A WAVE of city workers deserting the rental market and moving home to buy in their native counties is expected to fuel house price rises of 4.4pc in 2021, according to a nationwide survey of estate agents.
Respondents have identified a surge in what they have labelled ‘boomerang buyers’ – those who previously travelled home for the weekend and then back to the capital, as leading the charge in a relocation revolution that is changing the face of house buying nationwide.
On top of this, recent CSO data confirms that 2020 saw the highest number of returned Irish from abroad in 13 years, a factor which is likely to continue to some degree through 2021.
The survey carried out for the Irish Independent by the Real Estate Alliance group on the views of more than 50 member firms nationwide has found that, despite the injurious effects of Covid19 on the economy overall, estate agents throughout the country still expect the price of the average three-bed semi,
Ireland’s most common home type, to rise significantly in the next 12 months in rural and city locations.
Non-Dubliners living and working in the capital have not only faced the highest rents in generations, but if they want to buy a house their budgets take them an hour or more from their workplaces.
Lockdowns proved the benefits of remote working and appear to have caused the sea-change.
Agents feel that the current unsatisfied supply levels, especially for properties with home working potential, will negate Brexit or Covid influences on the market in the short term.
This prediction comes off the back of a 2020 in average house prices returned to growth – they rose by 1.9pc nationally and 1.4pc in Dublin city
“Quality broadband and remote working possibilities have replaced commuting strategy and location as the drivers of an extraordinary market which is outperforming all expectations – despite the Covid crisis,” said REA spokesperson Barry McDonald.
“Nationwide, we are seeing the same phenomenon of people returning to their roots to live – safe in the knowledge that they can work from home.
The big loser has so far been the Dublin rental market, of which many of the new returning first-time buyers were availing and paying some of the highest rents ever recorded.
“This has not lessened demand in Dublin sales with a massive urgency among a growing cohort of buyers, with the October mortgage approval rates up by 15pc year-on-year, according to the Banking And Payments Federation Ireland, but supply going in the other direction,” said Mr McDonald.
“This year lending restrictions (Central Bank rules) and Brexit uncertainty will prevent runaway growth, but a shortage of suitable properties will continue to put upward pressure on prices over the coming 12 months.
“In 2021, the reality facing buyers is that the market remains unbalanced as demand races ahead of supply.”
However, a softening effect is expected to come later this year as a result of would-be vendors who postponed selling because of the virus bringing their homes to market, most likely in the second half of the coming year.
“Those who deferred selling in 2020 on account of the pandemic may alleviate that pressure in the next 12 months,” says McDonald.
“Many people who have serious concerns about Covid did not put their homes on the market and do not want to get out to look at other properties.”
Meanwhile, the REA network predicts January and February will also bring an inflationary dynamic early in the year as mortgage exemptions, usually front loaded in the year, come into play, adding to the current exceptional levels of demand in the market.
Price rises of 5pc are predicted by agents in the capital’s postcoded zones, with REA Grimes in Clontarf reporting unprecedented demand and up to 40 parties viewing any property that comes on the market.
Agents in north county Dublin are forecasting increases of 4.3pc as the supply of new homes on to the market is likely to be unable to meet current demand.
Previously there has been a reasonable supply available in this region.
South County Dublin returned to growth last year (1.6pc) after declining by 5.1pc in 2019.
Agents predict that this upward trend will continue with a 5.1pc upturn on present prices forecast in 2021.
Agents in three of the main cities outside Dublin are optimistic about this year, with rises of 5pc predicted in Cork (2pc in 2020) and 3pc in Limerick which experienced no growth last year.
The biggest predicted rise nationally comes in Galway City, which is forecasting 8pc growth, off the back of a 3pc increase in 2020.
Average semi-detached prices in commuter counties rose by 2.68pc in 2020, with most growth in the last quarter.
Agents are predicting prices to grow by 4pc this year as hybrid home workers opt for more space and fewer days working in the office.
The country’s large towns experienced 1.9pc growth last year, mostly in the final quarter, and REA agents are predicting that this will continue throughout next year with growth of 4.4pc predicted.