Irish residential property prices rose 1.1% in February from a year earlier, official data showed on Friday, but activity and listings appear to have collapsed since then after a lockdown to curb the spread of the coronavirus.
While the February data suggested a continued stabilisation in the market in the first two months of the year, Ireland introduced a series of restrictions in March to contain the virus, including a stay-home order, in place until May 5.
Activity has collapsed as a result, Davy Stockbrokers chief economist Conall MacCoille wrote in a note on Friday, with 700 transactions added to the state's property price register in the week to April 15, close to 40% lower than the weekly average in January and February.
Estate agents had stopped viewings before the restrictions were tightened late last month, which MacCoille said could push transactions to a negligible level and even prevent the Central Statistics Office (CSO) from publishing a house price inflation reading for April.
"Ultimately, a functioning housing market will require the COVID-19 business restrictions to be relaxed – making questions on where house prices go redundant for now," MacCoille said, predicting volatile price movements in the illiquid market.
"It is possible that transactions could bounce back in Q3 if the restrictions are relaxed, but almost certainly not sufficient to make up for the disruption early in the year."
House prices have stabilised over the last year, having shot up for five years following a strong economic recovery from a property crash a decade ago. Prices are 17.9% below their 2007 peak, according to CSO data.
However the economic shutdown has more than trebled the unemployment rate to 16.5% – at least temporarily – and consumer sentiment suffered its largest monthly drop on record in April, a survey showed on Thursday.
Ronan Lyons, an economist at Trinity College Dublin who analyses data for Ireland's biggest property website Daft.ie, said nervous buyers would likely hold off while sellers evaluate the scale of the income shock to prospective purchasers.
New listing on Daft tumbled by almost 80% year-on-year from March 29 to April 11, and while there has been a rebound this week in Dublin, Lyons said that may suggest estate agents are testing the market with units they are under pressure to sell.
"I would expect prices to fall, the demand shock is going to be far bigger than the supply shock but we may not see it until September, October, November when the market recovers in terms of activity," Lyons said. (Reuters)