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To Buy Or Not To Buy

To buy or not to buy – is now the right time?

When COVID hit in March 2020 and catapulted us into lockdown it was assumed that our demand for houses would decrease and prices drop as a result. This was a logical thought when we were restricted both economically and socially and with thousands of people unemployed – but how wrong we were!

House prices did drop during our first and most severe lockdown.  However, prices recovered and have increased since then.   Year on year Dublin prices have increased by 6.9%, Limerick city by 7%, Tipperary by 4.9%.  The most substantial growth has been in Leinster where prices are up by 18% in Kilkenny and by 14.3% in Wexford (figures as per Daft report).  Waterford house prices have increased by 12% and Cork city prices have increased by 11.6%

Why are house prices increasing when we’re in a lockdown?

I think there are a few reasons for this; 

  • Remote working – people moving from the cities to more rural locations.  For the last year there are thousands of people working from home, they no longer need to suffer long commutes into city locations to work.  When working from home they have no commuting costs or no take away coffee / lunch costs etc.  Some employers are now offering the opportunity to WFH to their employees on a long term basis which means these employees are seeking to purchase a home away from the cities.  And why not – wouldn’t we all prefer to buy a house with a garden in the fresh air in preference to a one bed apartment in a built up area? 
  • Huge increase in savings – Every day I’m talking to people who are saving a couple of thousand euro month on month.  It has been widely reported that we had an increase of an extra 14.2billion on deposit in 2020.   Some of this money is being used as a deposit for a new home be it their main residence or an investment property.     People want an option for their cash where it’ll potentially grow and not be at risk of losing value if the funds are held on deposit.
  • During each lockdown we’ve seen multiple sectors out of work, this year alone  construction was partly shut down for approximately 3 months.   Automatically this means that new homes are not being built and in turn this is having a negative effect on our supply of houses.  We have very few houses being built but then we have the Help to Buy scheme which is incentivising first time buyers to purchase new homes in preference to second hand homes.  And why not if you can get up to €30k from this government backed scheme.   Also impacting the cost of housing is the significant increase in the cost of building materials. Part of the reason for the increase in building materials costs is the reduced manufacturing capacity and higher demand.

Supply & demand

We all learned in school that if there’s a shortage of supply and strong demand this will immediately impact on the price. This has most definitely happened with our housing situation.

Based on data from property websites My Home and DAFT, these companies estimate that as of February this year there were only 15,500 second hand houses for sale in comparison to 20,350 in the same period in 2020 – down 24% in the 12 month period.

2020 also saw some Irish people return from abroad during the pandemic, these people are now also looking to buy a new home.  I have mortgage applicants whose employer is abroad and they are working remotely on an international basis.

Because of the shortage of houses I sense that there is an urgency to buy a house and to buy it asap before they take another price hike.  But is it a good time to purchase?

Due to government level 5 guidelines, a home buyer can only view a house when a contract is drawn up.  This means that you cannot physically view the house you wish to purchase until you have sale agreed / deposit paid.   Auctioneers are now offering virtual viewings of houses up for sale (OMG hasn’t COVID significantly heightened our level of technology!)  I’m hearing different views on virtual viewings – auctioneers say it’s fantastic and unforgiving as it’s 3D and you can view all corners of every room in preference to just walking through each room.  Some viewers then say that the wide lenses being used make the room look bigger than it actually is and then when you physically see the rooms they are smaller than expected.  

Personally, I find it difficult to buy shoes online not to mind buying a house!  

We’re now also reading reports where global investment funds are buying up entire estates with the intention of renting out these houses, this is also raising concerns about the already constrained supply of houses for personal buyers.  Hopefully the government will introduce laws to de-incentivise these purchases.

I’m sensing some panic in potential house buyers with whom I speak on a daily basis, I feel that people are getting caught up in a frenzy to purchase – does this sound like history repeating itself – I hope not. 

So should you buy a house now or should you wait – that is the question.

Are housing prices going to continue to rise due to lack of supply / pent up demand and increasing cost of construction?   Or when restrictions lift will there be a build-up of vendors who are happy to allow potential buyers walk through their home with the prospect of a profitable sale?

There are a lot of house hunters with mortgage funds approved but will they find their new home before the approval expires? Only yesterday a customer of mine enquired about getting mortgage approval and is planning on buy a house in a new development in Cork – they’ll be ready between May & October 2022! Their loan offer will be well expired by that time.   Conversation for another day is the cost of these houses – 3 bed semi d (1267 sq. feet or 117.8 sq. metres) is costing €335k – for a couple earning average wages of €40k pa they currently can borrow a max of €280k – it’s easy to see how first time buyers need the HTB funds to include as their deposit.

I’ll leave it up to you, the readers of this blog, to decide if you would buy a house now or if you’d wait and hope that prices will decrease in the next year or so.

The Central Bank of Ireland specified a need for 34,000 houses to be built every year for a decade from 2020 – CSO figure for new houses built in 2020 was only 20,676.

Yes, prices are crazy at this time but I’m not sure they’re going to decrease any time soon.

This article was composed by SYS Group Mortgages Manager Helen Slattery. If you need any more information please give Helen a call on 067 57059 / or email

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"Home is the nicest word there is" Laura Ingalls Wilder