Report Author: Ronan Lyons, Associate Professor in Economics, Trinity College Dublin.
Prices continue to rise – albeit at a slower rate than has become common over the last decade. That is the key takeaway from this latest Daft Report. Having been largely static in the second half of 2022, and again in the first three months of this year, prices have risen since then.
Between June and September, prices rose by an average of 1.1% – compared to an increase of 3.5% in the second quarter of the year. But, combined with that earlier increase, it means that prices are 3.7% higher than a year ago. Dublin bucks the trend somewhat – a modest 0.1% fall quarter-on-quarter and just a 1.4% increase year-on-year – but across all the main regions, this broad pattern of increases in the last six months offsetting falls in the previous nine – holds.
Given all that has happened in the macroeconomy over the last 18 months, a reasonable person might ask how – how are prices rising again? Under the hood, the figures behind this latest report give some support to the idea that the dramatic increase in interest rates is gumming up supply in the second-hand housing market, more so than affecting demand.
Late in 2022, the total number of homes available to buy across the country was up one third on the same date a year ago. Granted, this was from a low base. Just over 17,000 homes were available to buy on October 1st last year, up from 13,000 year-on-year but well below the more than 26,000 available on the same date in 2019 – before COVID-19 shook the market.
COVID-19 – with all its lockdowns that affected regular economic activity – had led to a seizing up of the market in second-hand homes. By March 2022, there were just 10,000 homes for sale across the country. Over the following six months, there was a brief recovery – culminating in that 17,000 figure from October last year. But that turned out to be a peak. Since then, the number of homes available to buy at any point in time has slowly but steadily fallen. In the following year, it has fallen almost 30%, with just 12,200 homes available to buy in September 2023.
Is this down to a lack of supply coming on to the market or strong demand? For the same number of homes put on the market, the stronger demand is the fewer will be on the market in three months’ time. But in some ways, these are flip sides of the same coin. Apart from first-time buyers – obviously a key part of the market of course – and executor sales, in the second-hand market most buyers are also sellers.
Nonetheless, we can look at the flow of homes onto the market to get a sense of the supply side of the equation. The ‘target’ – to the extent that there is such a thing – would probably be something like 70,000 listings over the course of a year, which is just above the total number of homes listed for sale during 2019, the year before COVID. In the twelve months between March 2020 and February 2021, there were fewer than 46,000 homes listed for sale. Over the following year, that flow improved bit by bit, to reach 56,000 in the year to early 2022. But over the last 18 months, the 12-month total number of homes listed for sale has largely been stuck at that level.
And in the last few months, it has started to dip. While in the year to February, there were 4% more homes listed for sale than in the preceding 12-month period (57,500 compared to 55,200), in the year to August, there were 4% fewer homes than in the equivalent period a year earlier: 54,100 compared to 56,500.
The pattern described, characterized by a reduced stock of homes for sale compared to the previous year and a decline in the flow of homes entering the market, is consistently observed across all four principal regions covered in this report: Dublin, the rest of Leinster, Munster, and Connacht-Ulster. Moreover, the timing of these trends aligns across all regions, with both stock and flow measures of homes available for sale showing negative changes during the summer months.
From this analysis, it is evident that the supply of homes is indeed weakening, although not yet to a dramatic extent. In other words, the recent increase in prices observed over the last six months may be influenced, at least in part, by a shortage of supply. However, it is noteworthy that both pricing and quantity data suggest that, at least for now, demand appears to be holding up relatively well, despite the various challenges in the market.
How does the ultimate transaction price compare to the listed price?
For over 165,000 properties since the start of 2010, and on average 20,000 properties in recent years, it has been possible to connect up the transaction with the original listing. Over this 12 year period, the typical property sells for a price that is 0.3% above its listing price – but that gap has changed a lot over time. During the period 2010-2012, properties sold on average for 10% less than their initial listed price – but by early 2014, Dublin properties were selling for 5% above, even as Munster homes were still selling for 3% below.
Across the country, the typical transaction price in the third quarter of 2023 was 2% above the listed price. A year ago, the gap nationally had been 4.9%, while two years ago, in Q3 2021, the typical transaction price was 3.8% above the listed price. Indeed, the last three months of 2022 saw greater market heat – as measured by the premium paid by buyers above the listed price – than at any other time since the start of 2010. This seems to have slowed dramatically to 2%. The second figure shows market heat by region in the third quarter of 2023, compared to the same three-month period in 2022 and 2021. Market heat is greatest in Dublin, where the transaction price is typically 3.8% above the list price,down from 6.7% in Q3 2022. In Munster: 2.8%. In the rest of Leinster, the gap is 0.6%. In Connacht-Ulster, like Leinster, the gap is smallest, at 0.0% down from 3.2% in 2022. In contrast to Q3 two years ago, when the typical property sold for 1.6% above the listed price.
Prices down year-on-year in six markets
Mix-adjusted listed prices are, on average across the country, 3.7% higher now than a year ago. After three quarters of without price rises, the second and third quarters of 2023 have seen gains, on average, with prices up 1.1% between June and September. But regional differences exist – with prices up 8.1% year-on-year in Connacht-Ulster (excluding Galway) compared to an annual increase of 1.4% in Dublin. Across all 54 markets, prices are rising in year-on-year terms in 48 (although in most cases by less than 5%) and falling in six, all of those in Dublin.
Average Listing Price: €322,602
Quarterly rise of 1.1%
Average list prices nationally rose by 1.1% between June and September, the second quarter of price rises following the 3.4% increase in the second quarter.
Prices up 3.7% year-on-year
Prices nationally in the third quarter of 2023 were 3.7% higher than a year previously, a modest increase in inflation compared to the first and second quarters of the year.
Increases in Munster and Connacht-Ulster
Of the five main regions covered in the report, price rises are highest in Munster and Connacht-Ulster, at 5.9% and 8.1% respectively.
Homes for sale up – but at slower rate
The total number of properties available to buy on June 1st was just under 12,200, down over 20% on the same date last year and roughly half the pre-covid 2019 average of 24,000.
Leinster – Inflation remains relatively low
Prices increase 1.4% Q/Q – Listed prices in Leinster (outside Dublin) increased by 1.4% in the third quarter of 2023, down from 3.1% in Q2.
4% increase year-on-year – Compared to a year ago, prices in Leinster in the third quarter of 2023 increaed by 4% – down from a high of 16.4% in Q3 2021.
Over the last 20 years, Daft.ie has collected a vast amount of data on the Irish property market. In 2018 alone, over 140,000 properties for sale or rent were advertised on the site.
About the Report
The goal of the Daft Report is to use this information to help all actors in the property market make informed decisions about buying and selling. In addition, because it is freely available, the Daft Report can help inform the media, the general public and policymakers about the latest developments in the property market. This is the Daft.ie House Price Report, the partner to the Daft.ie Rental Report, which will be issued next month. Together, they give house-hunters and investors more information to help them make their decisions. These twin reports mean that Daft is the only objective monitor of trends in both rental and sales markets on a quarterly basis, making the report an essential barometer for anyone with an interest in the Irish property
market.
The Daft Report was first launched in 2005. It has already become the definitive barometer of the Irish rental market and is being used by the Central Bank, mortgage institutions, financial analysts and the general public alike. The Daft.ie House Price report is Ireland’s longest-running house price report, combining information from the Daft.ie archives with data from Ireland’s Residential Property Price Register.
Methodology and Sample Size
The statistics are based on properties advertised on Daft.ie for a given period. The regressions used are hedonic price regressions, accounting for all available and measurable attributes of properties, with a Cooks Distance filter for outliers. The average monthly sample size for sale properties is 5,000. Indices are based on standard methods, holding the mix of characteristics constant, with the annual average of 2012 used as the base.
About Daft.ie
Daft.ie is Ireland’s largest property website. The latest audited report from ABC (Sep 2011) shows monthly traffic of 130 million page impressions (pages of information received) and 1.976 million unique users per month across Daft Media’s property websites (daft.ie, rent.ie, let.ie, property.ie). This makes Daft.ie the biggest property website in Ireland across all demographics.
Disclaimer
The Daft.ie Report is prepared from information that we believe is collated with care, but we do not make any statement as to its accuracy or completeness. We reserve the right to vary our methodology and to edit or discontinue the indices, snapshots or analysis at any time for regulatory or other reasons. Persons seeking to place reliance on any information contained in this report for their own or third party commercial purposes do so at their own risk.
Credits
Economic Analysis: Ronan Lyons & Tom Gillespie.
Marketing and Communications: Laura Barry.
Layout and Design: Kevin Gannon.
