'Tentative' signs that 'heat in housing market easing slightly'

'Tentative' signs that 'heat in housing market easing slightly'

Across the country, households paid a median or mid-point price of €285,000 for a property in the 12 months to March 2022.

Irish house prices continue to surge close to Celtic Tiger levels, but there are “tentative” signs that the “heat in the housing market may be easing slightly”.

KBC Bank chief economist Austin Hughes said upward pressure on Irish property prices “remains substantial” but the 0.6% increase in prices between February and March was the “slowest monthly rise in a year”.

KBC Bank chief economist, Austin Hughes. Picture: Iain White Photography
KBC Bank chief economist, Austin Hughes. Picture: Iain White Photography

“While this slowdown is partly seasonal, adjusting for this factor, prices are currently increasing at a slower pace than at any time since last summer,” he said.

Mr Hughes was reacting to the latest Property Price Index from the Central Statistics Office, which showed that house prices increased nationally by 15.2% in the 12 months to March 2022. This was the highest rise in seven years.

Prices outside Dublin are rising at a faster rate than the capital, up 17.3% in the last year.

The average price of a home in Cork is more than €300,000, with the area covered by Cork County Council having an average price of €300,557, while a home in Cork city costs €305,186.

The cost of new homes across the country is 6.2% higher now than it was in the first quarter of 2021. The price rise for secondhand homes is far greater, up 17.8% on the same period last year.

Existing homes accounted for 3,288 of the home purchases registered with Revenue in March 2022, or 83.9%. The remaining 630 (16.1%) were new homes.

Across the country, households paid a median or mid-point price of €285,000 for a property in the 12 months to March 2022. The lowest median price paid for a home was €136,500 in Longford, compared to the highest of €601,000 in Dun Laoghaire-Rathdown.

House prices are now just 2.1% lower than the peak during the Celtic Tiger in 2007. From their trough in early 2013, property prices have more than doubled nationally, rising 118.2%.

Mr Hughes said the issues around supply and demand for homes in this country were exacerbated by the pandemic and such factors were “extremely forceful in their impact on property prices”.

“But these impacts should also prove finite,” he said.

A further small acceleration in Irish house price inflation in the next month or two can’t be ruled out.

“But the March data show tentative signs that recent pressures may have peaked.” 

Mr Hughes said that while people may have been able to build up more savings during the pandemic, the capacity to keep high levels of saving up will be affected by the surging cost of living.

He also said that affordability and buyer sentiment will likely be adversely affected by the looming interest rate increase from the European Central Bank.

He added: “As a result, we continue to see a bumpy path towards notably lower Irish property price inflation through 2022.” 

Meanwhile, Sinn Féin housing spokesperson Eoin Ó Broin said that the latest data shows the Government must revise its affordable housing targets upwards.

 Sinn Féin’s spokesperson on housing, Eoin Ó Broin TD. Picture: Dan Linehan
Sinn Féin’s spokesperson on housing, Eoin Ó Broin TD. Picture: Dan Linehan

“The private market will not deliver affordable homes for the vast majority of people and it is time for the State to ramp up its direct delivery of new homes,” he said.

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