Rising building costs to keep house prices at boom levels

Rising costs for building materials will keep house prices at record highs, a report from the Banking & Payments Federation Ireland (BPFI) finds. 

“Leading indicators show pressures building up in relation to input prices, which could have a knock-on effect on housing prices,” the report states.

Annual inflation for building and construction materials was 18.2pc in April.

"Figures show the rate of increase in average property prices has been declining on a monthly basis since the middle of last year, which may reflect increasing housing supply," Brian Hayes, CEO of the Banking and Payments Federations pointed out.

"With the most recent data showing there were 32,456 units commenced in the twelve months to April 2022, this is a healthy sign of the pipeline for completions," he added.

The latest report shows that residential property price inflation accelerated again in Q4 2021, with prices up by 14.4% in the twelve months to December 2021, compared with an increase of 2.2% in the year to September 2021.

The CSO’s national index was only 4% lower than its highest level in April 2007 and the highest level since March 2008.

Prices for new dwellings were 5.1% up year on year, while prices of existing dwellings 16.7% higher.

Prices in Dublin rose by 13.1% in the year to December 2021, with house prices in Dublin increasing by 13.5% year on year and apartment prices in the county by 11.3%.

Residential property price inflation outside Dublin rose by 15.4% year on year.

"Twelve counties had standardised rent levels of more than €1,000, the most since the data series began, and led by

Dublin at €1,916. Carlow and Waterford joined the four Dublin Commuter counties, plus Cork, Galway, Kilkenny, Laois and Limerick as the counties with average rents above €1,000," the report adds.