The ongoing US-EU trade war may drive down property prices in Ireland because of the property market’s disproportionate reliance on high income earners working in multinational sector, according to a new report by property website MyHome.ie, in association with Bank of Ireland.
Significant proportions of the workforce in the multinational sector are non-nationals, with a previous report finding that 92% of renters in Dublin Docklands are coming from abroad to work in the city.
Similarly, a residential property market report for Dublin in the first quarter of 2023 also confirmed a trend of rising non-Irish buyers, finding that Irish people bought just 35% of the residential properties in the period, down from 65% in the last quarter of 2022.
If the economic trade war does not occur, forecast for 5% inflation on property in 2025 could prove too conservative, today’s report also said – noting that asking prices were up 8.1% nationwide over the year, with annual asking prices outside Dublin rising by over 9%. Annual asking price inflation in Dublin is now 6.2%.
The average Irish residential property transaction of €404,000 was an eight-times multiple of average annual earnings of €51,000, the report’s author said.
Meanwhile, the report found asking prices nationally rose by 1.7% on the quarter, by 2.6% in Dublin and by 1.1% in the rest of the country.
This means the median asking price for new instructions nationally in the quarter was €375,000. In Dublin it was €450,000 and in the rest of the country it was €315,000.
The MyHome report found that the average mortgage loan for house purchase is now almost €320,000 – up 7% on the previous year.
First-time buyer mortgage drawdowns rose to 26,200 in 2024, their highest level since 2007, but mover drawdowns fell to just 9,000 loans, now 20% below pre-Covid-19 levels.
Just 10,800 homes are available for sale on MyHome in March 2025 – a fresh record low, while average time to sale agreed is down to 11 weeks, the report found.
The author of the report, Conall MacCoille, Chief Economist at Bank of Ireland, said: “Record low supply and continued surging demand are still driving the property market, but risk here is that Ireland’s relatively thin, illiquid housing market, reliant on those at the top of the income distribution could be exposed to a sudden negative economic shock, such as the risk of a US-EU tariff war, especially if it were to disproportionately hit employment in the high-paid multinational sector.”
He said, however, that in the absence of a trade war, all signs point to further growth, and in that instance our forecast of 5% inflation for 2025 may even prove to be conservative. “The average mortgage approval was €318,400 in January, up 7% on 2024 – pointing to further price gains, while the extent of the tightening housing market is still striking. At end-March, just 10,800 homes were listed for sale on MyHome, a fresh record low. Just one in every two hundred homes in Ireland is currently listed for sale.
“Notably, first-time-buyer mortgage drawdowns rose to 26,200 in 2024, their highest level since 2007 but mover drawdowns fell to just 9,000 loans, now 20% below pre-Covid-19 levels.”
Meanwhile, Mr MacCoille warned of increasingly stretched affordability in the market. “Through 2024 Ireland’s residential property price index rose by 8.7%, stretching affordability versus the 5.6% pay growth recorded over the same period. The average Irish residential property transaction of €404,000 was an eight-times multiple of average annual earnings of €51,000. This is the most stretched Irish house prices have become relative to income since 2009.”
Turning to supply, he said the picture couldn’t be more opaque. “The 67,000 housing starts recorded in 2024 clearly didn’t reflect underlying activity levels, but rather developers rushing to avail of waivers on local authority and water infrastructure charges. That said, it is worth remembering that completions of scheme houses rose to 16,200 in 2024, or including one-off houses, to 21,600. In both cases these are the highest levels attained since the Celtic Tiger era.
“The disappointing 30,000 completion figure for 2024 reflected the 8,763 apartment completions, down 24% on the year. However, 15,900 apartments, equivalent to at least two years’ supply, were still under construction as of September 2024. In summary, we would still expect some pick-up in housing completions in 2025.”
Joanne Geary, Managing Director of MyHome, said: “As the threat of a trade war with the US looms, our reliance on certain sectors of the economy will come into sharp focus. The housing market is vulnerable to any economic headwinds, so it is imperative that the Government limits the impact if at all possible while also continuing to ramp up housing supply.”