'Brexit certainty bounce' to see house prices rise by 2.4pc in year ahead as growth returns

Estate agents across the country believe that a 'Brexit certainty bounce' will return the property market to modest price growth following uncertainty over the UK's departure from the EU, which has been a key factor in freezing or lowering prices in many locations in 2019.

The Real Estate Alliance (REA) estimates that, last year, the price of an average three-bed semi fell by 0.6pc nationally and 4.3pc in Dublin city.

Brexit uncertainty and Central Bank lending limits played a major part in price drops - especially at the higher end of the market.

In its survey carried out for the Irish Independent, REA agents in the capital's post-coded addresses are predicting price rises of 2.8pc this year, with north Co Dublin forecast to see increases of 2pc (compared with -2pc in 2019).

It is a prediction supported by Davy stockbrokers, which last week predicted house prices would rise by 2pc or more if subsiding Brexit fears stimulate greater spending on high-end homes.

South County Dublin lost most due to the Brexit effect (-5.1pc in 2019) and the survey sees a level of confidence returning to the market, with a 2.2pc upturn on present prices forecast in 2020.

Agents in the area believe that certainty will encourage activity after a year that saw houses in the €550,000-plus price brackets drop €30,000 in value.

"With slightly more clarity on our economic future in the last few months of the year, we saw a bit of a selling resurgence - but mainly at the lower end of the market," said REA spokesperson Barry McDonald.

"There are financed first-time buyers in the market, but (there is) a shortage of supply of the type of accommodation that is most in demand, at a price that is affordable.

"The market continues to be characterised by small investors selling up and an absence of cash buyers, leaving sales dependent on working couples and the availability of finance.

"However, with wages not rising and Central Bank limits remaining unchanged, house prices are not going to take a dramatic rise in the short term."

The survey shows that homes priced between €250,000-€350,000 are selling quite quickly, but the market up to €450,000 is much slower. Above that point, a shortage of buyers is apparent.

Commuter county locations have proven reasonably strong for agents.

"Where new homes are being built in Dublin and the commuter areas, they are selling reasonably well - but only up to a certain price point.

"For the market above that €450,000 point to change, we need certainty, confidence and clarity over Brexit," said Mr McDonald.

"The difference between now and 2007 is that the market is not aspirational, and people are moving when they have to, for space purposes, rather than feeling pressured to constantly upgrade."

Pricing is the key to sales success as fresh properties enter the Dublin market, according to Paul Grimes of REA Grimes in Clontarf and the city centre.

"The lending restrictions mean that buyers have a budget and the condition of the property at the price becomes a deciding factor due to the increasing cost of renovations," he said.

Agents in three of the four main cities outside Dublin are cautiously optimistic about 2020, with rises of 2pc predicted in Cork (1pc in 2019) and 4pc in Galway which experienced no growth last year.

Limerick is also forecasting 2pc growth, off the back of a 2.5pc rise in 2019, with agent Michael O'Connor of REA O'Connor Murphy predicting that a number of new developments due to come on the market will increase supply and possibly cap price increases.

Agents in Waterford are predicting that prices will remain static after a year which saw average houses rise by €5,000 to €215,000 - thanks to activity in the last few months of the year.

Galway agents McGreal Burke said Brexit and other factors made the second half of 2019 slower than expected. But it feels this may have built up a reservoir of purchasers who will be confident to enter the market this year.

Commuter counties suffered a 1pc fall in 2019 and are looking for prices to rebound by 1.5pc in 2020.

"An increasing supply of new homes plus Brexit uncertainty will continue to affect the second-hand market in commuter areas," said Darina Collins, of REA O'Brien Collins in Drogheda, who is predicting no change in prices in 2020 after Louth saw prices fall by 5pc in 2019.