The cost that comes with living in Ireland is experiencing an increase. The amount of houses available to buy does not satisfy the demand for it, electricity demand has increased over the years due to the need for technology and is putting strain on electricity output. This increase in demand is causing a rise in the price of housing and electricity.
Any type of product or service dependant on housing and electricity thus also increases its prices. Consumer price inflation has a rate of price increase of 2%. Understanding the reasons for this happening and adapting is important.
Housing demand
Central Statistics Office this month shows a 7% increase in prices, this increase has happened over a year and is countrywide. Putting things into perspective, according to KBC chief economist Austin Hughes the supply of housing does not meet the demand for housing in Ireland, and has been aggravated by the pandemic due to hindering the construction of new homes. According to Central Bank, Ireland needs at least 35 000 units every year to satisfy demand. A report from Irish Institutional Property states the need for housing units could go as high as 50 000 units a year.
Since the demand for second-hand housing is increasing the price increase that comes with it is causing people to be reluctant to sell their houses. Their plans to sell their homes in order to buy a new one are affected because prices are not favorable or they would keep their house because they understand its increase in value. This is what decreases second-hand house sales.
According to daft.ie and myhome.ie the annual property price inflation is 13%. If you’re in a position to buy a home it makes financial sense to do so. Buy sooner to avoid paying the extra that comes with inflation. Repaying a mortgage on a three-bedroom home is now less expensive than paying rent in nearly every region in the country except for Dublin 4 and Dublin 6.
Electricity Demand
There are several factors causing the demand and price for electricity to rise. Generating electricity in a way that does not damage the environment tends to be less efficient for electricity production. Covid 19 has delayed the repairing of generators in Cork and Dublin according to EirGrid. This contributes to 15% of the conventional generation. Thus increasing demand for electricity.
The demand for electricity has increased due to it being required by newer technologies. Data centers are very power-hungry, electrical vehicles and heat pumps all contribute to increased demand.
Consumer price inflation
The CSO’s figures show that the most notable changes in prices in the year to July were in the areas of transport, prices were up almost 8%, home fuel prices up 5.3%, and the hotel and accommodation sector had prices increased by just over 3%.
Transport and fuel are dependent on electricity this price increase is directly related to the increase in demand for electricity. The same goes for hotels and accommodation, their price is related to the demand for housing and electricity.