A MODEST SLOWDOWN in asking price inflation has continued in the first quarter of this year, with the market constrained by poor supply and impacted by a range of both positive and negative factors, according to the latest quarterly property report from MyHome.ie.
The Q1 2023 report, in association with Davy, found that annual asking price inflation slowed to 3.2% nationwide, and was 0.6% in Dublin and 5% elsewhere around the country.
Meanwhile, the report found asking prices dropped by 0.3% nationally and by 0.8% in Dublin. Asking prices rose by 0.2% elsewhere around the country over the quarter.
This means the median asking price nationally is now €310,000, while the price in Dublin is €395,000 and elsewhere around the country it is €265,000.
The report also found that homes are now being sold for just 1% over asking prices, versus 6% at this time last year, while the US banking crisis means expectations for further ECB rate hikes have been scaled back.
Dublin house prices have also fallen for four consecutive months and are already 2% below peak September 2022 levels.
The author of the report, Conall MacCoille, Chief Economist at Davy, said the data suggested that frothy pandemic-era valuations were now cooling off.
“This quarter’s MyHome report shows another 0.3% fall in asking prices in Q1 2023. Prices fell especially sharply – by 0.8% – in Dublin but rose marginally by 0.2% in the rest of Ireland. We expect the 0.6% decline in the CSO’s RPPI measure of transaction prices in January will continue in the coming months.”
However, he said that Ireland’s property market was not in freefall and would likely fare better than the UK and US markets in the coming months.
“First, demand remains buoyant given the resilient performance of the Irish economy. Second, housing supply remains very constrained. Third, the European Central Bank is not expected to raise interest rates as aggressively as the Bank of England or Federal Reserve.”
“Fourth, the surprise decision by the Central Bank of Ireland to loosen the mortgage lending rules will in time put upward pressure on house prices.”
Stretched valuations for housing were concentrated in the capital, where the average price in January 2023 was 9 times’ average income.
The average mortgage approval for first-time buyers hit a fresh record high in February of €281,350 – likely reflecting looser Central Bank lending rules.
There were 13,600 available properties for sale on MyHome.ie in Q1 – still well below the pre-pandemic figure of 20,000.
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