House price inflation is now running at its highest level since 2017, the latest residential market review from property advisors DNG shows.
House prices are now 11.1% higher at a national level and 9.4% higher in Dublin than they were in June 2020, as a result of strong price inflation in the market during the first six months of this year.
DNG said that prices at a national level have increased in value by 7.9% on average during the first six months of the year, while prices in Dublin have increased by 6%.
The estate agents said that strong demand along with with a scarcity of homes for sale in the market has driven up residential property prices across the country.
"In the first six months of the year, an uptick in the rate of increase in house prices has been driven by the shortage of supply in the context of rising disposable income, elevated savings levels and demographic pressures," they noted.
An analysis of the stock of homes currently for sale indicates that there are about 35% fewer homes listed for sale now compared to the same time last year, and 45% fewer than at the same point in 2019.
The DNG House Price Gauge, which tracks residential property price movements in Dublin, shows the average price of a resale property now stands at €482,617 - its highest level since the first quarter of 2009.
However, the report notes that Dublin residential property prices are still 33% below their previous peak level in 2006 but have almost doubled since the market low point in 2012.
DNG said that at a national level and excluding Dublin, the average price of a home now stands at €233,582 up from €210,258 in June 2020.
Today's report also notes that at a regional level, the annual rate of price inflation in the year to June was strongest in the Mid West (15.8%), Midlands (11.4%) and South West (11.3%) but below the overall national average in the West (9.5%) and South East (9.6%) Border (10.2%) and Mid-East (10.6%) regions.
DNG's Director of Research Paul Murgatroyd said residential property inflation has accelerated markedly in recent months, driven mainly by increased first time buyer demand on foot of record levels of mortgage approvals.
"Our analysis of purchasers during the second quarter shows that first time buyers continue to dominate the resale market accounting for 54% of purchases during the period. In addition, over two thirds (70%) of buyers rely on mortgage finance in order to complete their transaction," Paul Murgatroyd said.
"The elevated level of demand in the current market is evident now because of the easing of the restrictions placed on the property sector and house hunters during the last lockdown," he said.
He added that buyers who had paused their property search during lockdown are now back in the market competing with those buyers with more recent loan approvals.
DNG chief executive Keith Lowe said that Covid-19 has been a game changer for the housing market as it has been in most developed countries.
Mr Lowe said that buyers have more savings and are more focussed on making life changing decisions than they were before the pandemic, while an increasing number of ex-pats are also returning home and purchasing high end properties as many can now work remotely.
"In the new homes market, large parts of the construction industry remained closed during the most recent lockdown which impacted new homes supply, and in the second hand market many older members of society have delayed moving home awaiting full vaccination and the confidence to move forward," Keith Lowe said.
"We have noticed that an increasing proportion of buyers are now seeking to buy in their home localities rather than in Dublin, as the prevalence of remote working increases. In addition, demand for holiday homes has increased noticeably since the start of the year thus driving up prices in those regions," he added.
