Price of new homes surges by 11% in a year

While second-hand home purchases represented 83.7% of the homes bought in August, the price of these homes had risen just 0.6% across the year. File photo: Eamonn Farrell/Photocall Ireland

The rise in the cost of second-hand homes is slowing down but the cost of new homes continues to surge, new figures show.

The latest Residential Property Price Index from the Central Statistics Office says first-time buyers in Cork county paid a median of €55,000 more for a new home in August 2023 compared to the same month last year.

In Dublin, this figure was even higher, at a median of €58,600 more for a new home for first-time buyers in August than a year previously.

Although the Government recently extended the Help-to-Buy scheme and is continuing its First Home Shared Equity scheme for new homes, the figures suggest that first-time buyers are facing far higher prices for new homes this year than they did last year.

Overall, the property price index showed that prices rose by 0.9% in the 12 months to August 2023, to continue the downward trend in house price inflation.

In Dublin, property prices are actually seeing a decrease with prices falling 1.9% across the year but prices outside of Dublin were 3.1% higher.

“The region outside of Dublin that saw the largest rise in house prices was the South-West (Cork, Kerry) at 4.4%, while at the other end of the scale, the Midlands region (Laois, Longford, Offaly, Westmeath) and the West region (Galway, Mayo, Roscommon) both saw a 2.1% rise,” the CSO said.

Households paid a median or mid-point price of €320,000 for a home in the 12 months to August 2023.

The national Residential Property Price Index increased by 0.9% in the 12 months to August 2023https://t.co/TfDjbkoevp#CSOIreland #Ireland #Housing #HousingConstruction #HouseBuilding #NewDwellings #PropertyPrices #HousePrices #BusinessStatistics #BusinessNews pic.twitter.com/CfZsOAAnf7

— Central Statistics Office Ireland (@CSOIreland) October 24, 2023

While second-hand home purchases represented 83.7% of the homes bought in August, the price of these homes had risen just 0.6% across the year.

In contrast, the price of new homes was 11% higher in the second quarter of 2023 than the same period last year. The purchase of new homes accounted for 16.3% of home purchases in August 2023.

First-time buyers accounted for over one third (34.4%) of homes bought in August, while over half (53.6%) were bought by former owner-occupiers. The remaining 12% were bought by non-occupier entities, such as approved housing bodies and investment funds.

Trevor Grant, who chairs the Association of Irish Mortgage Advisors, said that the slowdown in property price growth combined with Government schemes would “hopefully” assist first-time buyers to get onto the property ladder soon “if they can find a home”.

Mr Grant said:

The thorny issue of supply shortage is still there though and unless the Government addresses this and boosts housing supply, property prices could start to go up again at a much faster pace.

“We can only hope that more houses can come onto the market so that more first-time buyers can realise their dreams of buying their own homes.

“However, while house prices in Dublin decreased, prices outside the capital continue to increase at a faster pace than Dublin — a worrying development for those looking to buy in more affordable areas having been squeezed out of the capital.” 

Private equity firm Lotus Investment Group, meanwhile, said it expects regional house price growth will continue its “upward trajectory” in the coming years.

Its managing director, Ian Lawlor, said that the "thorny issue" of planning permissions needs to be tackled, adding: “We need more houses to meet demand and for this to happen, we need to see more planning approvals.”