New figures show that national house price inflation surged to 6.3% in 2020, the fastest rate of growth in almost three years.
The latest house price report from MyHome.ie, which is published in association with Davy, found that annual asking price inflation rose by 6.3% nationwide, by 4.8% in Dublin and by 7.2% elsewhere around the country.
The mix-adjusted asking price for new sales nationally is €284,000. The price in Dublin is €392,000, while elsewhere around the country it stands at €238,000.
Newly listed properties are seen as the most reliable indicator of future price movements, Myhome.ie noted.
It also said that today's figures confound warnings earlier in 2020 that the housing market could see double-digit price declines due to the outbreak of Covid-19.
The report said that prospective home-buyers have largely been insulated from job losses, while Government supports have protected incomes and removed the risk of forced selling.
"The job cuts that we’ve seen just haven’t been in the natural homebuyer segments of the population," said Conall MacCoille, chief economist at Davy. "They’ve been concentrated on people who are lower-paid; part-time workers, younger workers.
"That’s not a good or bad thing, it’s just a fact that natural home-buyers haven’t been affected."
He also said the pandemic was likely to have sparked a greater demand for space, while deposits have also been able to grow as consumers were left with little option but to save their spare income.
The report also noted that mortgage lending hit a new cycle high of €1.1 billion in October, adding that housing supply issues have become more acute with too much cash chasing too few homes.
Mr MacCoille said that house price increases were now likely in 2021.
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He said pressure on the housing market has not yet turned up in transaction prices, although the Central Statistics Office's Residential Property Price Index rose by 0.5% in October, the sharpest monthly increase in over one year.
"It is probably only a matter of time before the official measure of house price inflation accelerates," he said.
Many economic indicators had performed better than would have been expected in March 2020, however at that time few would have anticipated that the pandemic would still be limiting activity well into 2021.
Mr MacCoille said it was impossible to accurately forecast what was to come in the year ahead, the indicators were that the property market would remain resilient.
"Any forecast at this point in time is going to be completely uncertain or very difficult because of what’s happening with the virus and the prospects of the property market, like everything else, are related to how quickly the vaccine is rolled out," he said.
"The tightness in the housing market is there, what the pandemic has done so far is squeeze the supply side, it hasn’t led to job cuts among the people who are buying houses.
"The underlying story is that supply is being squeezed and demand is very robust and people are still out there trying to buy houses."
Angela Keegan, Managing Director of MyHome.ie, said the property market mirrors the overall economy, and we are in a much better place now than we may have expected to be early in 2020 when the virus emerged.
"Government Covid-19 supports, increased mortgage lending, and the concentration of job losses among mostly lower-paid workers have ensured the property market has remained buoyant, while the ongoing issue of supply has exacerbated demand leading to a rise in house price inflation," Ms Keegan added.
