House prices continue to rise but inflation rate slows

House prices continue to rise but inflation rate slows

Homes at Maryborough Ridge, close to Carr's Hill and the Carrigaline Road. The national annual asking price for a house is now 4.2% higher than during the same period last year, a new report shows. Picture: Larry Cummins

House prices have continued to grow over the past 12 months, with the national annual asking price now 4.2% higher than during the same period last year, a new report shows.

However, the latest quarterly report by housing website MyHome.ie has found the rate of price inflation is beginning to moderate, declining from the 6% national growth rate recorded the end of last year.

In Dublin, asking price inflation decelerated slightly to 4.1% and was 4.8% in the rest of Ireland.

According to the survey, the mix-adjusted asking price for new sales stands at €284,000 nationally. In Dublin, prices are €396,000, while asking prices elsewhere in the country are €236,000.

Nationally, prices were flat for the first three months of the year, but rose 1.1% in Dublin and fell 0.4% in the rest of the country when compared to the last three months of 2020.

Conall MacCoille, chief economist at Davy and author of the report, said housing market activity had persevered through the third lockdown.

“Remarkably, new listings for sale in the first quarter were down only 30% compared with 2020 versus 80-90% annual falls during the first lockdown. 

All the data suggests that housing market activity should bounce back rapidly once the restrictions are lifted."

“Mortgage approvals in January were up 12% on the year, with the average approval up 8% to a fresh cyclical high of €256,000. So, there is no evidence of tightening credit conditions holding back homebuyers.”

The property price register shows there were 9,032 residential transactions worth €2.9bn so far in 2021, up 2.5% on the same period in 2020.

The report suggests one explanation is that the busy summer trading season in 2020 was delayed and many agreed sales in late 2020 are only now being finalised.

The report also pointed to the increase in new properties listed for sale on the website in recent weeks.

“This suggests estate agents have adjusted their business models, using virtual viewings and other initiatives to maintain activity,” the report finds.

Demand is strong

Data on visits to the MyHome website by prospective homebuyers suggests demand is strong, with users in the first quarter up 13% on 2020, page views up 30% and sessions up 19%.

A survey of 2,521 prospective homebuyers in the first quarter of the year by the website found 47% of people believe prices would rise by up to 10% over the next 12 months, up from 26% in November and 15% in August.

Half of the respondents to the survey believed more stock on the market would encourage them to buy now, and 59% had saved more money for a deposit since the onset of Covid-19.

Angela Keegan, managing director of MyHome.ie, said interest in the property market was at a historic high.

As such, it is crucial that the construction sector be allowed to return to normal activity in order to address this obvious demand and safeguard the market as we emerge from Covid.” 

The report acknowledges it is “too early” to gauge the impact lockdown has had on homebuilding.

However, the impact of Covid-19 on the rental market is clearer, with a “softening demand” for rental property and reports of falling rental prices, the report says.

The Irish Consumer Price Index found the private rents measure was down 2.5% in the year to February 2021.

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