Ending the year on a familiar note

As one of the most unpredictable years in living memory draws to a close, the industry commentary is focused on trying to gauge the real impact of the pandemic so far on Ireland’s property market. Most of the broadsheets this week carry opinion pieces and soundbites from estate agencies and franchises up and down the country. Interestingly, the consensus is that the impact has been negligible, despite a total shutdown of almost two months and a reduced, online-only offering for most of the year, not to mention 30 percent unemployment.  Incredibly, the property market across most of the country held steady in 2020, with many pockets seeing housing price growth.
 
As will all market disruption, clear winners and losers emerge. The hospitality sector is suffering and there does not appear to be any light at the end of that particular tunnel yet. The BTR sector is thriving, limited only by output levels. The first time buyer market saw some interesting dynamics, with many people maintaining their jobs and salary levels, while drastically cutting outgoing expenses and growing savings. This may have been achieved through moving ‘back home’ and avoiding high urban rents. This cohort of remote workers is leading the charge in favour of rural living, with many opting not to return to the cities. This will be a transformative trend for the country, if it continues beyond next year (which is by no means inevitable).

New homes developers that embraced the unfolding chaos and adjusted their designs to incorporate home offices or flexible-use garden rooms grew their enquiries list.
Of course, a tiny subset of the industry – technology providers – have been the real winners, with their offering moving from novelty to urgent necessity in the space of days and weeks. 

Dramatically increased private household savings is a strong feature of the pandemic in 2020, however, it is still too early to say how and when this will translate into spending. Looking ahead into 2021, economist Ronan Lyons outlined in an interview with The Journal what we can likely expect from the property market over the next 12 months. He starts by pointing out that there may well be “more economic fallout in the employment sector in the coming year”, referring to “some sort of hangover for unemployment”, which will negatively impact on people’s ability to access mortgage lending. While such a decline in finance-ready buyers would ordinarily be expected to drive house prices downwards, our persistent undersupply of housing will likely protect against that, as Lyons explains: “Put simply: Even if fewer people than predicted are able to buy a home next year, there will still be more buyers than homes available.” He reiterated the need for the industry to deliver 40-50,000 new homes per year. It is quite remarkable that after the year we have collectively experienced, the industry ends this year on the very same note as that on which we started –  we need to build more, build better, build faster (build cheaper?). But how?


 

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group