Key Highlights:
The MyHome.ie Property Price Report for Q2 2023 reveals several key insights into the current state of the Irish property market. Chief among these findings is a clear signal of stabilisation, as evidenced by the rise in asking price inflation, following three consecutive quarterly declines. The report has been generated in conjunction with Davy.
In terms of specifics, annual asking price inflation saw a rise to 2.2% nationwide, with a slightly lower rate of 0.6% in Dublin and a significantly higher rate of 3.5% in other areas around the country. The report further shows a quarterly increase in asking prices by 4.3% nationally and by 3.3% in Dublin. Elsewhere around the country, inflation rose by 4.6% over the same period.
The median asking price for new properties nationally now stands at €325,000, while Dublin’s property market commands a higher median price of €418,000. Elsewhere in the country, the median asking price is €280,000.
A noticeable shift has been observed in the selling prices of homes, which are currently selling for 1.4% above the asking prices. This marks a significant change compared to the same time last year, when homes were selling for a 5-6% increase over the asking price. Transaction volumes, based on Property Price Register analysis, have shown growth as well, rising by 3.5% compared to the same period in 2022.
First-time buyers experienced a fresh record high in May 2023, with the average mortgage approval reaching €298,600, marking a 3.5% increase on the year. However, the total number of available properties for sale on MyHome.ie in Q2 still falls short of pre-pandemic numbers, totaling only 14,000 compared to the 20,000 properties typically available.
Despite the challenges, housing starts show promising growth, having increased by 7.4% in the first five months of 2023 compared to the same period in 2022. This trend led to a revised forecast for housing completions in 2023, with the new estimate at 29,500, up from the original prediction of 27,500. Additionally, the CSO’s RPPI house prices relative to the private rent index has seen a 6% decline since peaking in early 2022, which indicates potential upward pressure on rental yields.
Conall MacCoille, Chief Economist at Davy, interprets these numbers as a sign of the market’s resilience and potentially even gathering momentum. MacCoille indicates that, despite the European Central Bank’s rate hikes, homebuyers are taking on more debt, suggesting further upward pressure on house prices in H2 2023.
Yet, supply remains an issue. MacCoille acknowledges that the Irish housing market is still tight, with the average time to a sale agreement in Q2 2023 close to a historical low of 3.3 months. The number of available properties for sale on MyHome.ie is still down significantly from pre-pandemic levels. On a positive note, MacCoille highlighted the growth in housing starts, particularly in apartment construction in Dublin, which may help address the ongoing supply challenge.
Despite potential headwinds from the ECB’s rate hikes, MacCoille suggested that a fall in Irish house prices in 2023 seems less likely. Citing factors such as the supply-demand imbalance and financial stimuli like the Equity Loan Scheme, he predicted the Irish housing market will prove more resilient than counterparts, notably the UK.
Joanne Geary, Managing Director of MyHome.ie, echoed the optimistic tone while also expressing caution. She asserted that while the increased rate of housing starts is encouraging, it will take time for prospective homebuyers to see a significant increase in supply. She stated that, to make a meaningful difference, available properties on MyHome.ie need to approach pre-pandemic levels of 20,000.
The MyHome.ie report, therefore, paints a picture of cautious optimism in the Irish property market. While the challenges are evident, particularly in terms of supply, the positive trends in price stability and an increase in housing starts suggest steps in the right direction. However, it is clear that the market’s health will be closely tied to managing the balance of supply and demand while navigating the impact of monetary policy changes.