Residential property prices in Ireland look set to increase as demand for property continues to pick up, while the number of homes coming on to the market remains low in comparison.
A shortage of properties for sale has pushed up prices in recent months, as potential sellers wait until there are more homes available before putting theirs on the market.
The latest official data from the Central Statistics Office (CSO), for instance, shows that house prices in parts of the west of Ireland, including Galway, Roscommon and Mayo, increased in March by close to 20% year-on-year, which was more than double the average rise of 8% witnessed in Dublin during the same period.
Separate data released yesterday revealed that soaring mortgage demand is adding to Irish property price pressure, with the value of mortgage drawdowns in the country increasing by 40% year-on-year in the first quarter.
The recovery in Irish mortgage lending in recent months has coincided with a chronic housing shortage throughout the country.
Mortgage approvals also far outstripped drawdowns in Q1 2017, with year-on-year growth of 78% to €2bn (£1.7bn) pointing to further pent up demand among buyers in Ireland.
"The biggest issue in terms of these approvals translating into drawdowns is the low level of new supply," said Dermot O'Leary, chief economist at Goodbody.
“Approvals for new entrants is substantially more than the amount of new properties coming to the market thus the obvious conclusion is that prices will continue to be bid up. Price inflation is likely to continue to accelerate from here,” he added.
O’Leary said of the 20,000 mortgages approved for first-time buyers and investors in the past 12 months, just 10,000 would be met by new supply available for sale with self-builds set to account for almost half of the 18,500 homes forecast to be completed in 2017.
Despite the recent surge in Irish property values, home prices remain 31% below the 2007 peak, suggesting that the market offers room for growth.