The latest Q2 2023 report released by the property portal, Daft.ie, indicates a mild deflation in housing prices, with a year-on-year decrease of 0.5%. This marks a significant shift from the relentless price escalation seen since mid-2020, highlighting potentially weakening demand alongside decelerating recovery in supply.
The report details that while the second quarter of 2023 saw a marginal uptick of 2.4% in prices compared to the first quarter, the average listed price was slightly lower than the same period last year. This downturn follows the trend of declining prices from the dizzying heights of the Celtic Tiger period, with the current average price of €309,648 still falling one-sixth short of that peak.
Amid these trends, the total volume of properties available for purchase as of June 1st 2023 was just over 13,000. Although this figure represents a 5% increase from the previous year, it is still markedly below the 2019 average of 24,200 homes. Additionally, the growth in available properties has been slowing down in recent months, suggesting a slackening supply recovery.
The effects of this shift were not evenly spread across the country. Within major cities, there was considerable variance in the year-on-year change in house prices. Dublin and Waterford saw a modest decrease of 0.6% and 0.5%, respectively, while Cork and Galway experienced more significant deflations of 3.3% and 2.1%. Limerick bucked the trend entirely with a 1.1% increase in prices compared to a year ago, standing just 2.4% short of its late 2007 peak. Among the rest of the country, prices in Leinster remained stable, Connacht-Ulster saw a 0.6% increase, whereas Munster reported a 1% decrease.
Economist Ronan Lyons of Trinity College Dublin, the author of the Daft.ie report, stressed the importance of these findings. “The change in market conditions over the last 12 months is clear from the figures in this latest report. A year ago, double-digit inflation in housing prices was still prevalent across much of the country. Now, very few markets are seeing prices more than a percentage point or two higher than a year ago,” he stated.
However, Lyons also cautioned that while demand has diminished, the post-covid recovery in housing supply is also weakening. He pointed out that although this year might not witness any dramatic rises in housing prices, persistent underlying issues due to housing shortages are likely to continue.
In sum, while the slight decrease in Irish housing prices signals a respite from the intense price inflation of the past few years, the underlying issues in the market persist. The slowed recovery in supply, coupled with falling demand, paints a complex picture for the future of the housing market in Ireland. As we move further into 2023, market participants and policymakers will need to closely monitor these developments to address the ongoing challenges in the sector.