MyHome.ie Property Price Report: Market shows signs of stability despite interest rate hikes
The property market is showing signs of stabilising, with asking price inflation rising in Q2 following three consecutive quarterly declines, according to the latest quarterly house price report from MyHome.ie.
The Q2 2023 report, in association with Davy, found that annual asking price inflation was 2.2% nationwide, 0.6% in Dublin and 3.5% elsewhere around the country.
Meanwhile, the report found asking prices rose by 4.3% on the quarter nationally and by 3.3% in Dublin. Inflation rose by 4.6% elsewhere around the country over the quarter.
This means the median asking price for new instructions nationally is now €325,000, while the price in Dublin is €418,000 and elsewhere around the country it is €280,000.
Other findings include:
- Homes are now being sold for 1.4% over asking prices, versus 5-6% at this time last year.
- Property Price Register analysis of the year to date shows a 3.5% growth in transaction volumes compared with the same period in 2022
- The average mortgage approval for first-time buyers hit a fresh record high in May of €298,600, up 3.5% on the year.
- There were 14,000 available properties for sale on MyHome.ie in Q2 – still well below the pre-pandemic figure of 20,000.
- Housing starts are up 7.4% in the first five months of the year compared with the same period in 2022.
- Our forecast for housing completions in 2023 has been revised from 27,500 to 29,500.
- The ratio of the CSO’s RPPI house prices relative to the private rent index has fallen by 6% since its peak in early 2022 – implying upward pressure on rental yields.
The author of the report, Conall MacCoille, Chief Economist at Davy, said the data suggested that the market was stabilising and may even be generating some momentum. “Asking prices rose by 4% in Q2 2023, a healthy gain ahead of the busy summer trading season and following three consecutive declines. Housing demand remains resilient. There were €1.27 billion of mortgage approvals in May, a fresh record high. This represents 11.5% volume growth in the numbers of homebuyers with mortgage approval.
“The average approval for house purchase was €298,600 in May, up 3.5% on the year. Despite the European Central Bank’s (ECB) rate hikes, homebuyers are still taking on more debt, pointing to upward pressure on house prices in H2 2023.”
Mr MacCoille added that supply was still an issue but a rising rate of housing starts was encouraging. “The reality is that Ireland’s housing market remains exceptionally tight. The average time to sale agreed in Q2 2023 was still close to a historic low of 3.3 months. There are currently just 14,000 properties listed for sale on MyHome, still well down from pre-pandemic levels which exceeded 20,000.”
However, the added that “there were 30,900 housing completions in the year to Q1 2023 – well ahead of expectations. Furthermore, there were 13,000 housing starts in the first five months of 2023, up 7.4% on 2022 – this growth looks to entirely reflect apartment construction in Dublin.”
He said that the Irish housing market should prove more resilient than its peers, particularly the UK. “This is because of the enormous imbalance between supply and demand and stimulus such as the Equity Loan Scheme and the decision to loosen the mortgage lending rules.
“Certainly, a fall in Irish house prices in 2023 is still plausible and cannot be ruled out, given the prospect of further ECB rate hikes, but it now looks less likely. We have left our forecast for asking price inflation unchanged at 1.5% through 2023 but have revised up our forecast for housing completions to 29,500.”
Joanne Geary, Managing Director of MyHome.ie, said that the rate of housing starts was encouraging but cautioned that it would take time for prospective homebuyers to see a notable increase in supply.
“The stabilisation of the market is to be welcomed. We are moving in the right direction, but we are coming from a very low base in terms of supply. The Government’s demand-side initiatives and looser Central Bank lending rules appear to be negating the effects of rising interest rates, but we also need to see available properties on MyHome.ie approach the pre-pandemic figure of 20,000 to make a meaningful difference.”