Almost two-thirds of estate agents believe house prices are either close to or at their peak.
That’s the view of Society of Chartered Surveyors Ireland (SCSI) members in their Residential Property Market Monitor Review and Outlook report for 2024.
In the report the SCSI predicts that residential property prices will stabilise in the medium term and increase by just 1% this year.
It highlights that 63% of members believe house prices should level off or start to decline from their peak soon.
The report also found that the main factors influencing price expectations are the supply of homes, followed by interest rates and changes in the economy. More than three quarters of agents (76%) also reported a shortage of supply – with this increasing by 10% from last year.
John O’Sullivan, chair of the SCSI’s practice and policy committee, said that while current housing supply is “undoubtedly insufficient”, SCSI agents say initiatives aimed at increasing supply are kicking in and that the situation will improve in the coming years.
“While this is most welcome, the skills shortage in the construction sector remains a critical issue which needs to be addressed,” he said.
In total there were 59,967 residential transactions in Ireland in 2023, down 4% year on year.
The report highlights that 36% of all sales instructions in the final quarter of 2023 came from landlords selling their investment properties.
While down 4% on last year, Mr O’Sullivan said landlords are still exiting the market “in substantial numbers”.
He said the main reason rental units are not coming on to the market is due to complex and restrictive rent legislation, followed by a potential change in Government and housing policy, and net rental returns being too low.
“With mortgage approvals for residential investment lettings down 20% year on year, it’s clear those leaving are not being replaced in the same numbers by new investors,” he said, noting that new taxation measures aimed at encouraging landlords to remain in the market are only being implemented this year.
The report also examines the affordability of a new 3-bed semi-detached home for a first-time-buyer couple, using the example of a garda and a nurse with a combined gross income of €89,000.
It found that the northwest, midlands and southeast are the most affordable regions for this couple, while homes in the Greater Dublin Area and Galway are out of reach.
With the average market value of a new 3-bed semi-detached home in the Greater Dublin Area being €464,036, maximum loan limits mean the case-study couple hoping to buy a home in the area would fall short by about €62,000, also known as the affordability gap. This gap in Galway is €22,000.
The report also found that 61% of agents believe that a property’s Building Energy Rating (BER) is an important decision-making factor in relation to the level of an offer made on a property.
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