Energy crisis adds €60,000 to price of best insulated homes

The latest Irish Independent/Real Estate Alliance (REA) Average House Price Index data shows that a price gap is opening between energy efficient homes and those of a BER C rating and below.

Homes with the highest A and B energy ratings, are now selling for 12pc more than lower-ranked properties around the country and fetching 16pc extra in Dublin.

For an average home, this amounts to a difference of around €36,000 around the country and almost €60,000 in the capital, where the average price for a three-bed semi is ready to break through the €500,000 barrier.

The price gaps opening reflect a number of factors. First, the steadily increasing price of oil and gas, which still heats the majority of Irish homes, means buyers are becoming increasingly conscious of heating costs and are increasingly likely to pay more for a better insulated home.

The second factor is that the cost of construction materials and labour have shot up since the beginning of the year and therefore the bill for upgrading a home rated C or lower to a BER A or B has increased.

The Budget levy on concrete will also have an effect. In the year to April 2022 inflation in building and construction materials was at 18.2pc while some materials hiked even higher with wood and metal prices up by 60pc.

The good news is that REA data shows the rate of house price inflation has halved in the past three months as rising costs caused home buyers to be more cautious.

The actual selling price of a three-bedroomed semi-detached house across the country rose by 1.4pc over the past three months to €290,630 – an annual increase of 10pc.

This is a marked slowdown on the 2.9pc quarterly increase recorded in the preceding three months, signalling a cooling of the frenetic demand in the marketplace.

The time taken to reach ‘sale agreed’ rose to five weeks from four as REA agents nationwide reported a less frenzied approach to buying.

While the actual average selling price of three-bedroomed homes in Dublin city is about to breach the €500,000 mark for the first time, the 0.8pc quarterly rise to €497,500 is half that experienced in the previous three months.

“We have seen a definite slowdown in demand levels and the urgency that we were seeing with buyers has reduced,” said REA spokesperson Barry McDonald, whose own area of Lucan reported a 2pc drop in prices, back to March levels at €410,000.

“The traditional summer lull returned for the first time in a few years and there was no signs of the market heating up again in September, which is good news for buyers.

“Interest rate rises and cost of living inflation are definitely affecting sentiment, with viewers patiently waiting for the right property.

“There is still a massive shortage of housing, but Dublin agents REA Grimes are reporting an increase in supply and a wider choice of properties coming to market, leading to a longer sale time.

“The energy rating of a house is becoming a main talking point, with buyers increasingly taking the cost of heating or increasing the energy rating of older homes into account.”

First-time buyers accounted for 58pc of all purchasers in the past quarter, according to REA, a figure that rose to 76pc in Dublin, as people with mortgage approval look to get on the housing ladder.

The highest quarterly increase was seen in the country’s large towns where prices rose by 2.1pc to €207,207.

The survey found that a quarter of purchasers in this sector were from outside the county, as the appeal of home working still endures.

Prices in commuter counties rose by 0.7pc over the past three months, with time taken to sell jumping from three to five weeks. The only commuter town to record a drop was Dundalk, Co Louth, where prices fell by 4pc to €240,000.

Cities outside the capital experienced a 1.7pc rise to an average selling price of €303,750.

Prices in Galway city rose by 3.1pc to €330,000, with the average home taking just four weeks to sell.

“We have seen continued strong activity in Galway city during the summer, and prices have increased with energy efficient, well-located homes in highest demand,” said Kevin Burke of REA McGreal Burke.

“Buyers are very conscious of the cost of running their new home, and A-rated energy efficient homes are commanding a premium of 20pc in the market.”

Cork increased by 1.4pc to €350,000, while Waterford city prices were steady. Limerick saw prices increase by 1.9pc to €265,000.

“The number of landlords exiting the market is now somewhere between one in two and one in three,” said Pat Dooley of REA Dooley in Limerick. “A big issue will be that tenants will have nowhere to go when their termination notices are up, and we need emergency legislation relating to taxation of landlords to slow the exodus of properties from the rental market.

The Irish Independent REA Average House Price Survey concentrates on the actual sale price of Ireland’s typical stock home, the three-bed semi, giving an accurate picture of the second-hand property market.