Irish Housing Report Q4 2023, Daft.ie
Supply dwindles again
For much of the 2010s, once prices had bottomed out, the housing market had its own seasonal rhythm. During the first six months of the year in particular, listed prices would rise. Depending on the strength of demand – and in some years, it was strong indeed – prices would continue to rise in the third quarter. But in the final three months of the year, listed prices would typically fall back a little as buyers and sellers awaited the new year. This pattern was upended in 2020, when covid19 initially stalled and then supercharged the market. Listed prices fell in 2020Q2, the period of most uncertainty. But then they started an unprecedented eight-quarter run of increases. In the final three months of 2020 and again in 2021, prices rose. 2022 saw supply-side bottlenecks in the global economy exacerbated by Russia’s invasion of Ukraine. The resulting
inflation in the wider economy brought out a sharp response from Central Banks – including the ECB – who were keen to avoid a repeat of the decade of “stagflation” starting in 1972.
In raising interest rates so quickly, though, the effect was to alter mortgage market conditions, which had been relatively loose for some time (albeit loose within macroprudential constraints). This was most noticeable in the USA, which enjoys a liquid and flexible governmentsupported mortgage market. Rates there rose from below 3% (for the full term of the 30-year mortgage) in December
2021 to above 7% two years later.
The increase in Europe, where mortgage markets are less liquid, was less dramatic – and in Ireland, where there is significant concentration in the mortgage sector – more muted again. But the change in economic conditions nonetheless had its effect. Prices were stable in the third quarter of 2022 and then fell slightly in both the final quarter of that year and in the first quarter of 2023. It was the first in a decade – since
2012Q3-2013Q1 – that the national average listed price had recorded three quarters without an increase. But the year since then has been, at least as measured by listed prices, a relatively ordinary one. Prices jumped up in the second quarter, rather than in the first, and increased again in the third quarter. This most recent quarter saw prices fall, by 1.5% on average, quarter-on-quarter. It means that, over the course of 2023, the average listed price rose by 3.4%. This compares with a 6% rise during 2022 and increases of 8.1% and 7.7% in 2021 and 2020. With the exception of 2019, when prices fell by 1.2% on the back of increasing supply, it is the smallest increase in prices since 2013.
Lack of price growth because there is sufficient supply to meet demand is, by anyone’s measure, a good thing. But lack of price growth when there is scarce supply – simply because it is sufficient to meet weak demand – is less welcome. That seems to be the picture facing the secondhand market in particular at the moment.
On December 1st 2023, there were just over 11,100 homes for sale in the country.
Two things put that in perspective. Firstly, it is very low compared to almost any point over the past 15 years. It’s in line with the volume of homes for sale in the fifteen months between March 2021, when Ireland started to emerge from its heavy lockdown, to May 2022. But it’s dramatically below, for example, even the precovid19 average. Between 2015 and 2019 – not a period known for abundance of homes for sale – there were on average almost 25,000 homes for sale.
And secondly, in a perhaps fairer comparison with the most recent period, that total for December 1st
just gone is 27% lower than on the same date a year previously. Over the course of 2023, Ireland lost over 4,000 homes from its inventory, net of new listings. On the one hand, that suggests perhaps strong demand, despite everything. But in the 12 months to December 1st, the total number of homes listed for sale was a little bit over 51,000. In the preceding 12 months, it had been almost 57,000.
Housing prices are stabilising not because supply has increased to meet demand, but instead because demand has fallen to meet it. Supply of newly built homes for purchase has certainly increased but the second-hand market, which is the larger share of the market, has been working in the other direction –
buffeted by changed economic conditions. With construction of homes seemingly set to remain high, compared to recent years, for the next year at least, drilling into the differential trends between the new and second-hand markets is a target for this report as 2024 begins.
Ronan Lyons,
Associate Professor in Economics,
Trinity College Dublin
The Daft.ie House Price Report – 2023 Q4
Market Survey
Low price growth expectations
Expectations for price growth remain low in Q4 2023, up to 1.9% from 0.2% in Q4 2022. Expectations of price growth are slightly lower for Dublin than for outside of Dublin, 1.1% vs 3.3% respectively.
Roughly half of respondents state the need to save for a deposit an issue
Roughly half of those looking to buy but not straight away cite the need to save for a deposit as a key factor in delaying home purchase. This is a bigger issue in Dublin than outside of Dublin, 60% compared to 53%.
Lack of homes remains an issue for the majority of survey respondents
Over two thirds of respondents cite the lack of homes as a factor in delaying home purchase, similar to the same period last year. The lack of supply has been a relatively constant feature in the market throughout the five years.
How does the ultimate transaction price compare to the listed price?
“Market Heat” over time:
For over 165,000 properties since the start of 2010, and on average 60,000 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.
“Market Heat” by region – Now compared to one and two years ago
Across the country, the typical transaction price in the fourth quarter of 2023 was 2.9% above the listed price. A year ago, the gap nationally had been 3.0%, while two years ago, in Q4 2021, the typical transaction price was 3.9% above the listed price. Indeed, the last three quarters 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 slowed to 1.1% earlier this year but has risen since.
Market heat by region in the fourth 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 4.7% above the list price, down from 5.1% in Q4 2022. In Munster: 3.3%. In the rest of Leinster, the gap is 1.6%. In Connacht-Ulster, like Leinster, the gap is smallest, at 0.8%, the same amount as in Q4 in 2022. In contrast to Q4 two years ago, when the typical property sold for 2% above the listed price.
Quarterly fall of 1.5%
Average list prices nationally fell by 1.5% between September and December, following two quarters of price rises earlier in the year.
Prices up 3.4% year-on-year
Notwithstanding the fall late in the year, prices in the final quarter of 2023 were 3.4% than the same period a year earlier, reflecting those increases seen in the second and third quarters.
East/west divide
While prices in Dublin (up 2% yearon-year) and the rest of Leinster (up 0.8%) are close to stable, elsewhere
in the country saw greater inflation during 2023: 6.4% in Munster and 7.6% in Connacht-Ulster, respectively.
Number of homes for sale falls
The total number of properties available to buy on December 1st was just over 11,100, down 27% on the same date last year and less than half the pre-covid 2019 average of 24,000.
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.
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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.
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Credits
Economic Analysis: Ronan Lyons & Tom Gillespie.
Marketing and Communications: Laura Barry & Cara Daly
Layout and Design: Kevin Gannon
