Will property prices in Ireland fall? | Latest Data and Trends

Get insights into the latest data and trends of property prices in Ireland. Discover the future predictions and market fluctuations in the Irish property market.

Understanding property price movements can be a challenging task, given the various metrics used to measure them in Ireland. Official figures from the Central Statistics Office are based on completed transactions, resulting in a lag in reporting. Additionally, property agents, as well as Irish listings websites provide insights into asking prices, which sometimes align with achieved prices but can also reflect wishful thinking in a softening market.

Will property prices in Ireland fall? | Latest Data and Trends | ogusyis

Currently, the Irish property market is experiencing a state of flux. While official price markers continue to rise annually, the rate of growth has slowed, and certain regions are witnessing price decreases. However, month-on-month prices are on the rise across the country. So, what lies ahead for property prices in Ireland? Let's delve into the latest data and market trends.

July's Figures: Slowing Growth and Price Decreases in Dublin

The most recent figures published by the Central Statistics Office in July revealed that prices were rising nationally at an annual rate of 1.5%. This represents the lowest level of price growth in approximately three years. However, in Dublin, prices witnessed a decrease of 1.4%, marking the sharpest rate of decline since November 2020 when the pandemic caused a period of uncertainty in the property market. It's noteworthy that Dublin has experienced nine consecutive months of falling prices. In contrast, the rest of the country witnessed a 3.8% annual increase.

Reaching Milestones and Surpassing Celtic Tiger Peaks

Despite a modest fluctuation in prices across different regions, the market has achieved significant milestones. According to Real Estate Alliance (REA) figures, the average selling price of a three-bedroom semi-detached house has surpassed €300,000 for the first time since Ireland's property market peak during the Celtic Tiger era in mid-2007. The average price in Dublin has recently reached €504,167. Prospective buyers may hope that reaching peak prices will signal a softening or even a correction in the market.

Factors Influencing Property Prices in Ireland

As we examine the factors influencing property prices in Ireland, we find a tug of war between interest rates and inflation on one side, and a persistent supply shortfall on the other. The latest report from daft.ie highlights a 20% drop in the availability of properties between September 2020 and September 2021. On the other hand, interest rate hikes have yet to significantly impact the market, although their full effect is yet to be felt.

Steady Approval Rates and Government Policies

Despite supply shortages and interest rate concerns, banks continue to approve mortgages, particularly for first-time buyers. The Central Bank's decision to raise the borrowing limit for new buyers to four times their income has facilitated this trend. While overall approval numbers have fallen due to decreased household mortgage switches to lock in fixed rates before anticipated interest rate hikes in late 2022, there remains a steady stream of mortgage approvals.

The Government's Conundrum: Stimulating Supply and Supporting Landlords

The Irish government seeks to address the need for affordable housing, whether through purchases or rentals. Balancing conflicting demands from different sectors and interest groups poses a challenge. Consideration is being given to reintroducing mortgage interest relief, with debates arising over administration and eligibility. Challenges arise when attempting to make such measures targeted, potentially leaving out those near the boundaries of entitlement. Furthermore, the temporary nature of these measures complicates the decision-making process.

The Ultimate Focus: Supply of Housing

Ultimately, the availability of housing remains the primary concern. The Banking & Payments Federation estimates that over 30,000 housing units could be completed this year, which is promising but falls short of official targets that aim to complete at least 35,000 units annually until 2030. Accounting for population growth and rental property demand, some experts estimate the need for approximately 50,000 units per year. On the second-hand market, Sherry FitzGerald, an estate agent, has reported a record-low of just 13,750 properties listed in July. Increasing demand coupled with limited supply drives prices higher.

The Balancing Act Continues

While various support measures keep activity levels buoyant among first-time buyers, lenders are likely to pass on rate increases to borrowers. The eternal tug of war between affordability and supply will continue to shape market dynamics. Speculating on medium-term property price trends remains uncertain, but current indications suggest a renewal of price rises in all parts of the country after a temporary slowdown.

Navigating the intricacies of property prices in Ireland requires careful consideration of multiple factors. Despite challenges posed by supply shortages and potential interest rate hikes, the market remains resilient. Achieving crucial milestones and surpassing previous peak prices has its implications, signaling resilience and potential opportunities for buyers. As the Irish government deliberates on policies to stimulate housing supply and support landlords, finding the right balance will be key. Ultimately, the robustness of the market will hinge on the availability of housing and the ongoing tug of war between affordability and supply.