Most consumers expect house prices to continue rising
70% of Irish consumers expect house prices to rise over the next three years, according to a new survey by KBC Bank Ireland.
Just 12% said they expect to see prices drop, while 5% see prices being broadly flat.
The survey shows that one in two Irish consumers expects Irish house prices to rise faster in the next three years than in the past three.
The most common expectation was that prices would rise by between 4 and 5%, and the weighted average of all expectations was an increase of 4%.
Austin Hughes, chief economist with KBC Bank Ireland and author of the report, said this suggests that consumers expect the recent pace of price increases to persist.
“The 4% average annual increase envisaged is likely only modestly above expectations for average earnings growth and, as such, appears broadly sustainable.
“Encouragingly, the results don’t suggest expectations of an ever increasing rate of property price increases,” he said.
According to the survey, there was a higher expectation of property price increases in Connacht, Ulster and the border region – likely reflecting comparatively strong recent price trends in these areas.
While the share of Dublin respondents expecting price increases was broadly similar to the national average, the distribution favoured somewhat smaller increases.
There was also a larger number of responses from consumers in the capital envisaging price declines in coming years.
The survey shows differences in price expectations by age group.
Younger people, particularly those aged between 25-34 were less likely to expect prices to increase, while the number of people in this age group that expect prices to fall was twice the survey average.
“This likely reflects affordability considerations that are seen curbing the scope for further price gains,” said Mr Hughes.
“It may also reflect some element of ‘scarring’ from the crisis of just over a decade ago that has fuelled the belief in this group that periods of significant price appreciation give way to price declines,” he added.
In contrast, those aged over 65 – and those on higher incomes, were more likely to suggest that prices will continue to rise.