Irish Housing Market Report - June 2020 | Daft.ie

Daft Reports

8th Jul 2020

Market activity starts to pick up

This is the second of the new monthly Daft.ie Reports, covering both sale and rental segments. After two pretty volatile months, in terms of changes in listed prices, the month of June was largely calm. However, if compared to the same time last year, sale prices are now 3.3% lower, while rental prices are effectively unchanged (0.2% higher), on average.

Dublin largely mirrors these overall trends, with a 3.8% fall in sale prices and a 0.5% rise in rental prices in 12 months - as does the rest of Leinster and, by and large, Munster. In Connacht-Ulster, however, the market appears to be bucking the national trends, with rental prices 2% lower and sale prices almost 1% higher than this time last year.

It is on the quantities side of things where the more interesting market changes are happening. As noted in the commentary to the last report, there are two different ways to think about supply: the total number of homes available to buy or rent in a market on any given date (the stock) - the measure that matters more to a buyer or renter - and the total number of homes put up for sale or to rent during a period such as a month (the flow).

The flow of properties on to the market may be less of direct interest to buyers and renters but it is a better indicator of what's happening on the supply side of both sale and rental markets. And in both, June marked a return to something much closer to normality. The figure accompanying this commentary has two panels showing the number of sale and rental ads, by month and year, going back to 2015. This year, to end-June, is shown in black, while the previous years are shown in grey.

The return to something like normal is quite clear in the left-hand panel, which shows the sale segment. There, the number of properties posted for sale during April and May was roughly one quarter of what had been posted in 2019. But in June, the number of ads recovered to just 15% fewer than in 2019 - not far off January and February, which were more than 10% below 2019 levels.

At a national level, the rental segment (right panel) has been less affected and its June recovery takes it above all but one of the last five years. This is driven by Dublin, where there were 65% more rental ads in June 2020 than the same month a year ago. Elsewhere, there was annual growth in rental listings but far less dramatic - from 10% in Munster to 24% in Leinster (outside Dublin).

Overall, in the first half of 2020, there were almost 15,500 homes put up for rent in Dublin, up 3,000 on the same six months in 2019. In the rest of the country combined, there were almost the same number of rental ads in January-June (just below 15,400) but this represented a fall of 1,000 on the 2019 total, rather than a rise.

Setting to one side - if that is possible - the Covid-19 pandemic and the related economic turmoil, the additional rental supply in Dublin is most welcome for a city starved of rental homes. The danger, however, lies in the trap of thinking that these extra 3,000 homes on the market represent the solution to the housing shortage. 3,000 homes represents less than one month's demand of rental homes and - to the extent that it represents a shift from the short-term lettings market to the long-term rental one - is a one-off gain.

The country is still in need of hundreds of thousands of homes, principally for smaller households of one to two persons, in the social and market rental segments, and in or close to the biggest cities and towns. Ireland is used to building homes for bigger households, away from the big cities and for owner-occupiers. Repositioning the construction sector to build what the country needs is one of the big challenges for the new government.