The economy is complex and there are a huge amount of factors that can cause a property's price to increase.
Here are 5 common factors which cause a property's price to increase...
Location, Location, Location!
This old business cliche applies to a lot of things and property prices are no different - there's even a house-hunting show of the same name! Properties located in desirable areas, such as those with good schools, low crime rates, and easy access to public amenities like parks and playgrounds, tend to have higher prices.
Access to jobs is also a big factor which is why cities tend to have higher prices than rural areas. In Ireland, our cities are so popular, that the prices of surrounding commuter towns have seen huge increases since 2015.
Size & Condition
Alright, this is really two things in one, but they are tightly linked! The size of a property is one of the biggest drivers of its price. Take 2 houses on the same street. One is a 4 bedroom and the other is a 3 bedroom. In the vast majority of cases, the 4-bedroom house will have a larger price tag!
The condition of the property is what catches a lot of sellers out. They may think their property will get €350k because that is what their neighbour's house sold for. But if the neighbour's property was in far better condition and better maintained, and the seller's property has not been well taken care of, they might be frustrated and need to accept a lower price!
Properties that have desirable elements, such as a large backyard, a modern kitchen, a designer bathroom, or even just an extra room that can be used for a home office or playroom can fetch significantly more than a property in the same location of similar size and condition.
Strong economic conditions and low unemployment coupled with low-interest rates can lead to increased demand for housing and so higher property prices. It's simply a case of more people having access to more money to spend and so the market gets more competitive.
Lack of Supply
This is economics 101 and possibly the biggest factor causing Ireland's high house prices and housing crisis. A low supply of available properties can lead to increased competition among buyers which results in more bidding wars and higher prices.
Some of these factors cause more of an increase than others. In Ireland, prices are largely driven by low supply and favorable economic factors like low-interest rates. Although factors like Size and Condition do have an impact at a more local level.