FOR the Irish property market, it’s a case of out of the Brexit frying pan and into the Covid-19 fire, albeit with the briefest two months respite.
fter successive quarters of price shrinkage in many locations and in luxury property markets in particular, the most recent data from the Irish Independent/REA survey shows that values had been recovering slowly around the country since the start of the year, notably in South County Dublin where Brexit has impacted perhaps strongly.
Estate agents put it down to a general relaxation over the unknown effects of Brexit. And while these might not yet be dissipated in reality, sentiment has relaxed about its impact at least.
But all previous problems have paled in relation to Covid-19.
Oddly enough, past global experiences in other property markets have shown that while there is almost always a huge cut in sales transactions for a time as vendors postpone selling their homes for obvious reasons, once a virus like this moves through within months, second hand home prices are not generally much impacted. We saw this with Hong Kong for example, during the SARS outbreak.
But if Covid-19 re-surges, as happened in the 1918 flu, which dragged for 18 months, then jobs will be lost permanently, incomes will shrink and second hand house prices will fall with the economy.
Despite the expectation of a virtual shut down in future activity for a time in the housing market, the slip of data from the first quarter coronavirus-free window shows us some interesting trends, not least the resurgence of demand for and increasing prices in “old” commuter counties like Kildare and Meath, but also a more virulent hike in prices occurring in Wexford, thanks to shortage and to increased interest from both buyers and renters in the coastal county among Dublin buyers.
This is significant given that Wexford is one hell of a commute from the capital and is a reflection not only of the affordability problems in Dublin, but also now in the surrounding counties.
Also on the radar is some indication that new home supply is starting to sate demand and cool unsustainable supply led price hikes that had been taking place in Limerick, Cork and Galway cities. But we also see that big regional towns have been seeing values continuing to rise steadily, thanks again to shortage.
The overall picture minus coronavirus was a good one – albeit with renewed concerns for affordability in “old” commuter counties as prices started to rise again. If the crisis lasts three or four months, this is the point to which we will likely return after the expected economic bounce back.
On the other hand, if Covid-19 lasts a year or eighteen months, house prices will certainly fall in tandem with the economy overall. But in the latter scenario, house prices will be among the least of our concerns.