Asking prices for homes have fallen slightly for the third consecutive quarter, a new report from MyHome.ie has found – with Dublin prices now 2% below September 2022 levels.
However, the report said that while prices were down by 0.3% in the last quarter, house prices were still up 3.2% year-on-year and a free-fall was unlikely.
The analysis found that homes were now being sold for just 1% over asking price versus 6% this time last year, and that the property market was experiencing a correction of the stretched valuations in the pandemic years particularly in Dublin where average January price was 9 times’ average income.
“A modest slowdown in asking price inflation has continued in the first quarter, with the market constrained by poor supply and impacted by a range of both positive and negative factors”, the latest quarterly house price report from the property website said.
The Q1 2023 report, in association with Davy, found that annual asking price inflation slowed to 3.2% nationwide, and was 0.6% in Dublin and 5% elsewhere around the country.
Meanwhile, the report found asking prices dropped by 0.3% on the quarter nationally and by 0.8% in Dublin. Inflation rose by 0.2% elsewhere around the country over the quarter.
This means the median asking price for new instructions nationally is now €310,000, while the price in Dublin is €395,000 and elsewhere around the country it is €265,000.
The author of the report, Conall MacCoille, Chief Economist at Davy, said the data suggested that frothy pandemic-era valuations were now cooling off. “This quarter’s MyHome report shows another 0.3% fall in asking prices in Q1 2023. Prices fell especially sharply – by 0.8% – in Dublin but rose marginally by 0.2% in the rest of Ireland. We expect the 0.6% decline in the CSO’s RPPI measure of transaction prices in January will continue in the coming months.”
However, he said that Ireland’s property market was not in freefall and would likely fare better than the UK and US markets in the coming months. “First, demand remains buoyant given the resilient performance of the Irish economy. Second, housing supply remains very constrained. Third, the European Central Bank is not expected to raise interest rates as aggressively as the Bank of England or Federal Reserve. Fourth, the surprise decision by the Central Bank of Ireland to loosen the mortgage lending rules will in time put upward pressure on house prices.”
Mr MacCoille added that the forecast for asking price inflation had been revised to 1.5% for 2023 – from 4%. “This small rise could quite possibly split between falls in the capital and modest price gains in the rest of Ireland. However, the outlook is very uncertain and small price falls can’t be ruled out.
“Why? Asking prices have clearly had a weak start to 2023. Also, the correction in stretched valuations in some areas looks to have further to run. However, as 2023 progresses the tight market, resilient economy and, crucially, the easing of the Central Bank’s mortgage lending rules should support Irish house prices.”
Joanne Geary, Managing Director of MyHome.ie, said that housing supply was still the elephant in the room. “Unfortunately, stock levels are still a major concern. In an ideal scenario, we need approximately 50,000 new homes built every year, and we are running far short of that target at present.
“We know from our recent consumer sentiment survey that prospective homebuyers are feeling the pinch from the energy and cost of living crises, so now more than ever we need construction activity to ramp up to alleviate the build-up in pressure.”