THE PROPERTY MARKET can be difficult to predict at the best of times, but the coronavirus pandemic in 2020 brought with it a level of uncertainty that few had experienced before.
For some people, lockdown brought the opportunity to buckle down with savings. In fact, Irish household savings were ‘turbocharged’ by Covid during the first seven months of the year, with savings of €10 billion reported by Ibec.
For others, lockdown brought unemployment and a depletion to their funds. The Covid-19 adjusted unemployment rate for November 2020 was 21%. In the same month in 2019, unemployment stood at 4.7%.
This economic ambiguity led many to believe that the property market was set for a downturn – when in reality prices increased. According to the latest Daft.ie report, the average listed price of housing rose by 7.4% in the year up to December 2020.
Pair this with the lowest figure for stock nationally in almost 15 years (there were 15,400 properties available to buy on December 1), and it can be difficult to determine what property buyers and sellers should expect in 2021.
With this in mind, we spoke to James McDermott, Director of Sherry Fitzgerald McDermott in Co Carlow, about the changes he expects to see in the market this year.
1. People will continue to move outside of cities
Many of us heard of people leaving the capital and moving back to their family homes in the countryside during the first lockdown – and James expects that many people will set down roots in their new location.
“We’ll definitely see more people moving out of cities,” he says. “We have seen that already.”
Whereas buyers before may have had the view to commute to Dublin for work, working from home has showed that some employees don’t need to be in the office at all.
“We’re meeting a lot of people decamping from Dublin – but they’re not decamping to commute back, they’re decamping… period.
I meet couples who say they’ve a two-bedroom apartment on the south side of Dublin with two small kids, they’re working from home and they said they’ll never do it again.
“People are beginning to realise what bang for their buck they can get. I mean for the price of an average starter home apartment in South Co Dublin, they could buy a four or five-bedroom detached house on an acre in another county and they’ll have access to schools, shops and restaurants.
“We’re definitely seeing a trend of people beginning to move out of the cities, but not with the view of commuting back.”
2. Multi-functional homes will be of higher importance
Anyone who has worked from home with their partner, housemates or small children over the past few months will know the difficulty that comes with trying to concentrate as other members of the household mull around you, or the feeling of not being able to switch off when you sit down to eat dinner at the same table you worked at all day.
As a result, having a home that can adapt to your needs will be especially important to modern buyers, according to James.
“We’re finding that people are far more open to the notion that a property is rolling with you over the course of a 20 or 30 year period,” he says. “People with infants or small dependent children interpret their living space very differently. People with teenage kids can interpret that space differently to people with adult children who have moved back home.”
People are looking for slightly different things from their home. They’re not put off by the notion of having to make changes.
However, James says there’s still an emphasis on buying a ‘traditional’-style home.
“What they’re looking for doesn’t necessarily have to be cutting edge… I think Irish people in general are quite conservative when it comes to buying a house. We’ve had really ‘wow’ houses on the market and people will go ‘my God, that is amazing’, and they are amazing, but the conservative nature of Irish people kind of shies away from making commitments to that type of property.”
I think when it comes to buying a property, we play it very safe, we’re very much guided by our parents. And if not directly by parents, by parental attitudes.
3. There will be an increase in supply
The coronavirus pandemic led to many people who were intending to sell their property to put their plans on hold, but James reckons there will be a “healthier” supply over the next 12 months.
“We met a lot of people in the earlier part of 2020 intent on coming to the market with secondhand stuff or occupiers looking at upgrading. But with the uncertainty that followed in the year, a lot of those people said ‘no, it’s just just too many things up in the air’. People who were looking at upscaling or downgrading said ‘I’m not sure what’s happening with my work, I’m not sure where I’m going to be in six months time, I’ll hold off selling.’ So we had a lot of stuff that should have come to the market this year.
“We will probably see a little bit more confidence in the eyes of sellers come back this month, and I think we will see an easing of the Covid impact probably mid year. I would imagine that we will end up this year with slightly healthier supply, slightly more stuff coming to the marketplace. The market is probably going to continue to perform in around the levels that are performing now.”
4. House prices won’t drop
On the back of last quarter’s 7.4% year-on-year rise in house prices – the largest increase in three years – James doesn’t see house prices dropping this coming year.
We’re becoming accustomed to living with this and becoming customers trading within this environment.
“All indications we have at our fingertips today would suggest that prices will hold up. They have held up until now. I hope and think we are beyond the worst of it now… I can see prices rolling, I can see transactions increasing on the basis of there will be more stock and more supply.”
On top of that, James believes that people are “more motivated than ever” to buy their own home after the events of 2020.
“One of the take homes that I took from the first Covid lockdown would have been not that people were deterred from moving or deterred for buying their own home, but they were more motivated than ever to buy their own home. I thought that was reassuring.”
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