If your thinking of selling the following blog should give you an understanding of the current state of the property market as of 1st August 2024.
Property prices in Ireland are firmly on the ascent once again. After a period of stagnation due to a rapid succession of interest rate increases, the pace of price growth is showing renewed momentum. This resurgence comes against the backdrop of an ongoing shortfall in property supply, a recent decision by the ECB to start trimming rates, wage growth across the economy, and the move by the Central Bank to raise the earnings threshold at which borrowers could qualify for a mortgage.
How Sharp Are the Price Rises and Will the Momentum Continue?
As 2023 drew to a close, Irish property prices had largely stabilized. Prices in areas outside of the capital were still rising, albeit at a slower pace, while the cost of a property in Dublin was on the decline. Many analysts had expected market stability to persist through 2024, but that hasn’t been the case. Far from it—prices are rising again with the rate of increase looking quite pacey.
Property websites like MyHome.ie and Daft.ie, which compile reports based on asking prices for properties, had signaled this exact outcome. The momentum they saw months ago is now reflected in the official figures from the CSO, which are based on completed property transactions. Both websites continue to see a sustained increase in prices.
Asking Prices on the Rise
According to MyHome’s latest report, covering late spring into early summer, prices being sought by vendors were up 7.3% year-on-year, marking the fastest pace of price increase in almost two years. Similarly, Daft.ie reported an annual rate of increase running at 6.7% nationally. Both reports put the median asking price for a property nationally around €350,000, with the price in Dublin exceeding €450,000. What’s more, vendors are achieving well in excess of what they are seeking for properties. In May, properties were going for 6% over the original asking price at the median, a stark change from 2023 when the median premium was just 1%.
Converging Forces Driving Prices Higher
Several factors are driving prices higher. One perennial issue is the supply of properties. There were just 12,500 properties listed for sale on MyHome.ie at the end of June, close to the historic low hit earlier this year and down around 11% from last year. Daft.ie noted a similar trend, with just 11,350 properties listed for sale on June 1st, down 18% year-on-year and less than half the average between 2015 and 2019 of 25,000 properties listed at any one time.
Another factor at play is the growth in the labor market and wages. More people with stronger earnings chasing fewer properties is a recipe for steep price rises. The 4.7% rise in average earnings to €50,300 in the year to the end of the first quarter was always likely to push up house prices. Additionally, the average mortgage approval in April was €313,000, up 4.6% on the year.
The relaxation of the Central Bank mortgage lending rules for first-time buyers also appears to have played a role. The share of first-time buyers with a loan-to-income ratio on their mortgage between 3.5 and 4 times income jumped from 6% in 2022 to 36% last year.
The Role of New Builds in the Property Market
While the second-hand market is important, the critical supply comes from the new build sector. Over 32,000 units were completed last year, and the market is on course for a similar number this year. However, the target for completions has shifted closer to the 50,000 mark, with some analysts suggesting it may even be as high as 62,000 new homes required every year.
The ESRI recently suggested that between 35,000 and 53,000 completions per year would be needed to keep pace with demand, with the large differential mainly due to migration patterns and different scenarios for economic performance. The ESRI averages projected demand at around 44,000 units per year for the rest of this decade and 40,000 per year from 2030 to 2050.
Outlook for the Property Market
The bright spot in the market may well be the new-build sector where output has been enhanced and is continuing to gain momentum. As for the stock of older properties, there appears to be a blockage in the supply chain. Several reasons contribute to this, including the ‘trading-down conundrum,’ where older individuals have difficulty finding suitable smaller properties, and the recent interest rate environment prompting existing homeowners to stay put.
Now that rates have started to descend, there may be scope for some additional existing homes to come to market, but there’s little sign of movement so far. The current momentum in the housing market is likely to result in a high single-digit gain in the order of 5-6% for the full year.
For those thinking of selling, this upward trend in prices presents an opportune moment. If you’re considering entering the market, whether through an estate agency or auctioneer, now might be the perfect time to capitalize on these rising prices. Midlands Real Estate is here to help you navigate these dynamic market conditions and get the best value for your property. Visit our website to learn more about our services and how we can assist you in making the most of the current property market trends.
However, for potential buyers, the landscape suggests that prices are only going in one direction for the time being, and it could be some time before they reverse course to any serious extent.
About the Author
Kevin Loonam MIPAV MMCEPI
CEO of Auctioneering Firm of the Year 2024 – Midlands Real Estate
With a deep understanding of local markets and a commitment to excellence, Kevin has built a reputation for delivering exceptional service to both buyers and sellers. His expertise and dedication ensure that Midlands Real Estate remains at the forefront of the industry, helping clients navigate the complexities of the real estate market with confidence. Under Kevin’s leadership, the company continues to thrive, providing personalized and professional services tailored to meet the unique needs of each client. For more information about our services and how Kevin and his team can assist you, visit our website.
