Housing market still stuck in Covid limbo

TCD academic says rents and home prices are static with predicted falls failing to appear

THE property market effectively froze between April and June, and even though it is waking up, prices have stayed roughly the same, according to economist Ronan Lyons.

The assistant professor at Trinity College Dublin and economist with the Daft.ie property website said while we might have expected both rents and asking prices to fall because of the pandemic, they have stayed roughly the same.

The most recent figures from Daft showed that average monthly listed rents rose by an average of 1.2% in the year to July, standing at €1,412, with sale asking prices unchanged at €259,733.

Rents in Dublin were virtually unchanged, up just 0.2% in the 12 months to July, but rose faster outside the capital, and by 3.3% in the rest of Leinster.

There were just 19,538 properties for sale nationwide on August 1, down 22% year-on-year and the lowest August total since 2006.

However, there were 41% more properties for rent than on the same date a year ago, with the increase largely driven by Dublin, where there are almost twice as many properties available as in the rest of the country, where availability is largely unchanged.

Dr Lyons described the situation as ‘a conundrum’.

‘If you had asked me six months ago, I would have been in the camp that says by now if we’re not back to normal you’d expect to see rents and sale prices significantly lower but we haven’t seen that,’ he said, adding that there were a couple of different factors at work.

‘One is limbo. People aren’t sure when we go back to normal or how close to preCovid normal will that be, so nobody really wants to make concrete any losses – “do you know what, everything is screwed, I’m going to cut my property by 20% and I’ll be able to sell it”, and of course you turn around next March and everything’s fine, they’ve found a test or a vaccine or whatever, and you’re the eejit who cut it by 20%.’

About 20,000 new homes were being built each year, less than half what Ireland needs for its growing population, according to some estimates. But Covid shut down construction and sales.

‘While rental availability went up,

sale availability went down,’ Dr Lyons said.

‘The market effectively froze in April, May, June and is still in recovery, so the properties that would have come onto the market in those months were not there.

‘It’s more or less back to normal around the country in terms of how many ads are coming up, but you still have the missing two to three months where properties didn’t come on so that is affecting availamonths,

bility.’ He said that those who owned their homes were in a far more secure place than those who rented, as on top of being allowed to take a mortgage holiday of six

it remains very difficult to repossess someone’s home even if they are in big arrears.

And while many short-term holiday lets such as Airbnb properties went onto the long-term market, helping increase availability, rents still have not fallen – at least on paper. Dr Lyons said, however, that this could be skewed as landlords try to get around rent pressure zone rules that mean that if they cut their rent they cannot increase

it again by more than 4% per year.

‘Rent hasn’t fallen and I suspect that’s because landlords believe that in one or two years’ time things will be more or less back to the way they were,’ he said.

‘I suspect landlords may be haggling at the door and saying I’ll give you two months rent-free and I’ll come in and not writing it on the lease because they don’t want to get caught,’ he added.

‘No one wants to make concrete any losses’

‘I suspect landlords may be haggling at the door’