House price growth slows to just half the level at the end of last year, estate agent DNG says

The annual rate of house price inflation eased in the first half of the year, with the national growth rate more than halving from the end of 2022, and barely any growth recorded in Dublin.

The new data from the DNG House Price Gauge (HPG) comes amid ongoing interest rate hikes by the European Central Bank, making mortgages more costly and squeezing consumers’ spending power.

House prices in the Republic, excluding Dublin, grew by 3.4 per cent in the year to June 2023, down from a rate of 7.6 recorded in December 2022 and 12 per cent in June 2022. The average price of resale properties outside Dublin was €270,744, an increase of 2.3 per cent in the first six months of the year.

The decline in price growth was more marked in Dublin, where house prices rose by an average of 0.3 per cent over the year to June, compared with 8 per cent a year previously. The average cost of a home in the capital was almost €523,000.

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Apartments in Dublin, meanwhile, grew only 0.1 per cent in price, down from 4.4 per cent recorded a year earlier, meaning they were effectively unchanged from 2022. A Dublin apartment now has an average price of just over €358,000

Looking around Ireland, growth was strongest in the west region, where prices were up 5 per cent, and the midlands, where prices grew 4.2 per cent. The southeast region’s growth was below the national average at 1.7 per cent.

First-time buyers are still the most active in the market, with half of all resale property purchases from this cohort. This was despite a package of supports put in place for buyers of newly-built homes.

DNG director of research Paul Murgatroyd said affordability continued to be an issue for buyers, particularly in Dublin and the mideast regions, after strong price growth in the past couple of years.

“The changes made to the macroprudential lending rules since the start of the year mean that first time buyers can now borrow four times their income compared to 3.5 times income last year, and this is feeding through into transactions in the resale market,” he said.

“Recently released data from the Banking Payments Federation Ireland also shows that first time buyers remain very active in the mortgage market, with approval volumes to first time buyers in May this year up 20 per cent on the same period last year and first time buyers accounted for approximately two thirds of all mortgage approval volumes in the month of May.”

However, DNG chief executive Keith Lowe warned that although price stability was evident, there may be an increase in competition for properties on the market. “Anecdotally, we have experienced an uptick in enquiries, viewings, bids and purchase prices being achieved, due to competitive bidding in the last few weeks especially at the entry level to the market,” he said.

“This is in part due to a fall in the availability of homes coming for sale, which we estimate to be down 8 per cent this quarter compared to the same period last year.”

He also called on the Government to use some of the tax surplus this year to invest in infrastructure projects such as fast-tracking the Metro rail system in Dublin.