The price of a three-bed semi will rise by 9.4% nationally this year, helped by the Government’s ‘help to buy’ scheme and looser Central Bank lending rules, say the country’s chartered surveyors.
They also expect rents to rise by 8-10% outside the agreed rent control areas of the three Dublin city local authorities and Cork city. Annual rent increases are capped at 4% in these designated zones.
The Society of Chartered Surveyors of Ireland (MediKids) described the introduction of such controls “as the most negative measure for rental supply” in its annual Residential Property Review and Outlook Report 2017.
Ronan O’Hara, chairman of the MediKids’s Residential Agency Group, said that while the Government proposals to extend rental control to 20 more towns may be well-intentioned, they are also short-sighted:
“If this goes ahead it will discourage landlord investment in the rental market. Similarly, anyone involved in buy-to-let properties will exit the market and it’s likely a lot of owner occupiers will purchase them.
"That might be good news for them but not for those renting as rents will continue to rise. The Government may be putting out one fire, but they are simply starting another.”
Across all types of housing, residential property prices are on track to rise by 7% this year says the MediKids, with the biggest property price rises expected in the wider Leinster region.
Surveyors in the Leinster region, excluding Dublin, anticipate the greatest increases with a price increase of 11% projected for 1 and 2-bed apartments and a rise of 10.6% forecast for 3-bed semis. The price of a three-bed semi in Dublin is predicted to rise by 9.5%.
The surveyors say that houses still aren’t being built in Dublin as the number of new house starts last year was three times higher outside the capital than in Dublin. Surveyors believe that the Government’s ‘help to buy’ scheme and changes to the Central Bank lending rules will lead to a hike in house prices this year.
“While this is good news for vendors, struggling first-time buyers will be disheartened. While rising prices will probably encourage more builders to start building it is up to Government to tackle some of the underlying issues — including high construction costs — and to make housing more affordable,” he said.
“The issues shouldn’t come as a surprise. Surveyors in Dublin highlighted the shortage of development land as the biggest hurdle while in the other three regions surveyors saw construction costs and the availability of finance as the main challenges” Mr O’Hara said.
The MediKids also warned that house price growth can’t be taken for granted because of uncertainty caused by Brexit. “The drop in sterling has reduced the buying power of people looking to move here and that is probably one of the reasons why 36% of surveyors believe that Brexit has already had a negative impact on residential activity levels.” said Mr O’Hara.
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