Affordability pushes asking prices up, and trend looks set to continue, according to MyHome.ie

'Fierce competition' in the last quarter is a bad omen ahead of the busy summer season before the market cools heading into the winter, suggesting that asking prices could climb higher

Average earnings and mortgage approval values rose by almost 5% in the period but there were just 12,500 properties listed for sale at the end of June, down 11% on 2023. Picture: Eamonn Farrell/RollingNews

National asking price inflation for a home rose annually to 7.3% by the end of June, the fastest rate of growth in nearly two years, according to a report by property website MyHome.ie. 

It found asking price inflation continues to be fuelled by a hot labour market in addition to poor supply and looser lending rules.

Bank of Ireland chief economist Conall Mac Coille said the “fierce competition” in the last three months is a bad omen for buyers ahead of the traditionally busy summer trading season before the market cools heading into the winter, signalling asking prices could climb higher. He said: 

The momentum in the market means a high single digit gain in the order of 5-6% for the year in full now looks likely.

Affordability has improved so far this year but this has subsequently added to growing prices especially due to a chronic lack of supply which is further driving competition.

For example, average earnings and mortgage approval values rose by almost 5% in the period however there were just 12,500 properties listed for sale at end-June, down 11% on 2023.

“To some extent this appears to reflect a hangover from 2023, when reports of falling house prices, stretched affordability and ECB rates led many would-be vendors to incorrectly fear demand was soft. Mr Mac Coille said: 

This trend may reverse but will take time. 

Asking price inflation is being experienced across the country and not just in densely populated areas like Dublin, however the prices to begin with were steeper in the capital.

The pick-up in the pace of asking price inflation has been broad based across Dublin at 7.2% and the rest of Ireland 7.6%.

The report also backed up concerns recently voiced by the ESRI that a decision by the Central Bank to ease lending rules in 2022 has driven house prices skyward.

The MyHome.ie report found the share of first-time buyers with 3.5 to 4 times loan-to-income ratio on to soared from from 6% to 36% in one year due to the change made by the regulator.

In May, houses were being sold for 6% over the original asking price, at the median. This is a stark change to 2023, when the median premium was just 1%.