Ireland’s Housing Prices Surge Despite New-Home Completions: Factors at Play

Discover the latest data showing a 5.4% annual inflation in housing prices in Ireland, driven by population growth, labor market strength, and relaxed mortgage rules.

Despite the increase in new-home completions, housing prices in Ireland are once again on the rise. Official data reveals that annual inflation reached 5.4 per cent in January, marking the highest rate of price growth since the beginning of 2023. In Dublin, prices saw a healthy annual growth of 4.5 per cent in January after experiencing negative growth last year. Real estate experts are now considering revising their forecasts of 3 to 4 per cent price growth for the year, citing factors such as population growth, a robust labor market, and the impact of relaxed mortgage lending rules by the Central Bank of Ireland.

Ireland's Housing Prices Surge Despite New-Home Completions: Factors at Play

Additionally, real wages are increasing, making housing more affordable for buyers. The Central Bank predicts a nearly 9% rise in real wages for the average employee over the next three years. Furthermore, the European Central Bank is expected to implement a series of rate cuts this year after raising interest rates multiple times in response to the initial price surge. Mortgage pricing is likely to reflect this interest rate outlook.

Government initiatives like the help-to-buy schemes are also contributing to the rise in housing prices. The latest data shows that the price of new dwellings increased by 9.2 per cent annually in the final quarter of last year, double the overall market inflation rate.

The Irish housing market is experiencing a resurgence in prices driven by various factors such as population growth, strong labor market conditions, and government policies. With real wages on the rise and interest rates expected to decrease, the outlook for the housing market remains positive.