Home prices rise by 4.1%, bringing to an end a period of decline

Dublin asking prices now average €425,000, while asking prices in the rest of the country average €285,000, according to new report

The average asking price for a home across the country now stands at €330,000 according to a report by MyHome.ie. Picture: Denis Minihane

Asking prices for homes across the country have increased by 4.1% over the last 12 months as increasing demand brings an end to a period of decline, a new report shows.

According to the latest property price report from MyHome.ie, between July and September house prices rose to €330,000 compared to the same period last year. 

The rate of house price inflation in Dublin stood at 3% — with asking prices now reaching an average of €425,000 — while the rest of the country saw an increase of 4.9% — with asking prices now reaching an average of €285,000.

However, the report makes clear that while asking prices have started to rise again, prospective homeowners are now paying on average 3% over the asking price to secure a house compared to 1% over the asking price at the start of the year.

Conall MacCoille, chief economist at Davy and author of the report for MyHome.ie, said the “underlying imbalance” between demand and supply provided “fresh impetus to the market”, driving asking prices up.

Mr MacCoille said borrowing remains resilient despite rising interest rates, with people willing to pay above asking prices for homes.

The average mortgage approval for first-time buyers hit a record high in July of €298,800 — up 4% on the year.

Mr MacCoille said homebuyers may have to reconcile themselves to dealing in a tighter market as “any period of catch-up for housing activity following the covid pandemic is now over”.

Affordability stretched

He said while affordability was stretched and the impact of past ECB interest rate hikes had yet to be fully felt, the surprise loosening of the Central Bank mortgage lending rules earlier this year would add fuel to house prices over time.

We expect modest, low single-digit price rises from here, close to the pace of pay growth, so affordability is stable or improves marginally.

“However, this quarter’s MyHome report highlights the risk that the lack of housing supply could drive more aggressive price gains over the next one to two years,” he said.

Unlike other countries such as the UK and US, Ireland has so far avoided house price declines.

Mr MacCoille said this was down to the Irish economy performing better, with employment 12% above pre-pandemic levels and housing demand remaining robust.

In addition, he said the Irish housing market has been “less liquid than other countries, so less vulnerable to the unexpected rise in ECB rates”.

In the year to July, there were 28,900 housing commencements but the report said 40,000 to 50,000 units were needed annually to address our pent-up demand.

Joanne Geary, managing director of MyHome.ie, said the country’s constant supply problems were concerning, with just 13,400 homes listed for sale on its site at the end of the September — down from the pre-covid figure of 20,000-plus.

“Even more striking is the marked decline in new listings on the website — there were just over 7,500 new listings during the last three months, down a massive 38% compared with the same period last year,” she said.