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Underlying Market Dynamics: New data from CSO, Sherry Fitzgerald, Turner & Townsend, Davy 

It has been a surprisingly busy week for industry resorts, which is quite unusual for this time of the year. Data from the CSO, Sherry Fitzgerald, Turner & Townsend, Davy and others paint a dynamic yet challenging picture of the Irish marketplace, with significant property price increases, persistent demand for new housing, stubborn construction costs and global events continuing to impact the delivery of new housing supply.

According to the Central Statistics Office (CSO), property prices in Ireland have risen by 7.9 percent in the 12 months to April 2024, with Dublin experiencing an 8.8 percent increase in house prices and a 6.2 percent increase in apartment prices. South Dublin saw the highest growth in the capital at 10.5 percent, followed by Fingal at 7.1 percent. Outside Dublin, house prices increased by 7.3 percent, and apartment prices by 10.3 percent, with the Midwest region (Clare, Limerick, and Tipperary) experiencing the largest rise at 9.7 percent. The median price of a dwelling now stands at €335,000, with the highest in Dún Laoghaire-Rathdown (€624,999) and the lowest in Longford (€169,000). Residential property prices are now nearly 10 percent higher than at the peak of the 2007 property boom.

Despite this robust growth in property prices, the construction sector is tackling significant challenges. The industry faces a severe shortage of skilled workers, with estimates indicating that around 66,000 additional builders are needed annually to meet housing targets, along with 24,000 more for clean energy projects. High construction costs further exacerbate the situation. According to the International Construction Market Survey 2024 from Turner & Townsend, Dublin is now the fifth most expensive city in Europe for construction, with costs rising faster than in almost all other European cities except Warsaw. The average cost for building apartments in Dublin stands at €3,414 per square metre. Additionally, planning and public support for new developments remains a considerable hurdle, particularly for large-scale renewable energy projects essential for meeting Ireland’s climate targets.

Also, capital flows into the property sector have shown resilience despite challenges. According to Sherry FitzGerald, total capital flows into Irish property were €25.5 billion in 2023, just 6 percent below the €27.2 billion recorded in 2022. This slight decline reflects the resilience of demand in the residential market amidst rising borrowing costs. Residential spend, which includes residential investment and student accommodation, accounted for €22.9 billion of this total, remaining relatively unchanged from the previous year. Interestingly, the profile of purchasers has shifted, with non-household entities, including institutional investors and local authorities, reducing their investment to €4.1 billion from just over €5 billion in 2022, while spending by private households increased by 5 percent to reach €18.8 billion.

Most of the reports issued this week point to opportunities for growth and further investment within Ireland’s real estate and construction market, but there is little sign of the challenges abating. Financial services firm Davy predicts that Ireland will need 85,000 new homes annually until 2030 to approach the European average for per capita housing stock, driven by a projected population increase to 5.9 million by 2030. Closing the European gap completely would require an average of around 122,000 new homes annually, a figure close to quadrupling current output. Davy also forecasts a 4.5 percent growth in national income in 2024 and 4.3 percent in 2025, with lower inflation of around 2 percent providing a boost to consumer spending growth.

While ‘quadrupling’ current output is not a realistic prospect right now, the growth demanded will require systematic change.

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group