Estate agent Sherry FitzGerald said the average value of second-hand homes in Ireland increased by 2.2% in the fourth quarter of 2021, with values rising 9.6% cumulatively over the year.

This was a notable increase on the growth of 1.3% recorded in 2020, the estate agent said.

In Dublin, the value of second hand homes rose by 1.9% in the fourth quarter, with values growing 7.2% in the year. Prices had increased by just 0.5% in Dublin in 2020.

But price growth continued to be stronger outside of Dublin, with average values nationally excluding Dublin rising 2.6% in the fourth quarter and 12.9% over the year.

Eoin Lynch, economist at Sherry FitzGerald, said the overarching story for the residential housing market in 2021 was the heightened levels of house price inflation.

"The severe supply constraints, exacerbated by the pandemic, and unexpectedly robust levels of demand all fuelled these elevated levels of growth," the economist said.

He said that although Dublin noted higher levels of inflation in comparison to recent years, inflation in the capital was perceptibly lower than elsewhere in the country.

"This has been a persistent trend in recent times, reflecting the more binding nature of the macro-prudential rules in locations where average values are higher," the economist said.

He also predicted that the divergence in price inflation rates looks set to continue.

"While commencement activity has expanded since the reopening of construction sites in 2021, activity in many areas outside of Dublin remains substantially below what is required. This indicates limited future supply in these areas, leading to continued price inflation, albeit at more reduced levels than seen in the past year," Mr Lynch said.

39,100 sales were recorded on the property price register in the first three quarters of the year

Sherry FitzGerald said that sales activity remains healthy, with volumes significantly ahead of 2020 and in line with pre-Covid levels.

In the first three quarters of 2021, there were about 39,100 sales recorded on the property price register (PPR), excluding block sales and new homes acquired for social housing.

This represented a 33% jump on the first nine months of 2020, and a marginal 0.3% increase on the same time in 2019.

The estate agents also noted that the volume of properties valued over €1m that sold during the year was up 46%, when compared to the same time in 2019.

It also reported a notable increase in activity in more rural locations with counties such as Longford, Mayo, and Leitrim all recording growth of 20% or more compared to 2019.

Owner occupiers remained the most active purchasing cohort in the market in 2021, according to Sherry FitzGerald.

They represented 79% of all second-hand home purchases made through the estate agents in the year, with first time buyers comprising over half of all owner occupiers.

But the exodus of landlords from the rental market continued during 2021 with just 13% of purchases made by investors. Sherry FitzGerald said that 32% of all sales were investors selling their properties, signalling a huge disparity between those entering and exiting the market.

Marian Finnegan, Managing Director of Sherry FitzGerald, said that despite continued displacement in the market due to the pandemic and the related fallout, sales activity remains buoyant, most notably in the second-hand market.

"Regional areas and higher valued properties have seen the greatest growth in sales during the past year. The new year should see further expansion in sales activity, with new homes sales substantially stronger," Ms Finnegan said.

She also said that the rental market saw significant disruption and dysfunction in 2021 and this looks set to continue in 2022.

"The disparity of two investors exiting to each new entrant continued, stoking heightened rental inflation in the year. With limited scope of new rental supply on the horizon in many locations outside of Dublin, rental availability will be a significant bone of contention in 2022," Ms Finnegan added.