The annual rate of house price inflation in Ireland slowed to just 0.9 per cent in August, the lowest level of growth in prices seen in more than three years, as rising interest rates deterred prospective buyers.
The latest residential property price index, compiled by the Central Statistics Office (CSO), indicated that prices in Dublin were now falling at an annual rate of 1.9 per cent, which was the sharpest rate of decline since 2012 when the market was still reeling from the financial crisis.
On a monthly basis, prices nationally rose by 0.3 per cent, down from 0.4 per cent the previous month.
In the 12 months to August 2023, house prices in Dublin fell by 2.3 per cent while apartment prices were down by 0.2 per cent. The highest house price growth in Dublin was in Fingal at 0.2 per cent, while Dún Laoghaire-Rathdown saw a decline of 3.9 per cent, the CSO said.
The softening of headline price growth and the reversal in Dublin comes on the back of nine consecutive interest rate rises from the European Central Bank, which have made it more expensive for buyers to borrow. The bank lifted rates again in September. Wider cost-of-living pressures are also cited as a factor in the slowdown.
The CSO’s figures show households paid a median (or middle value) price of €320,000 for a dwelling on the residential property market in the 12 months to August.
The Dublin region had the highest median price (€435,000) in the year to August. Within the Dublin region, Dún Laoghaire-Rathdown had the highest median price (€634,919), while Fingal had the lowest (€407,500).
The highest median prices outside of Dublin were in Wicklow (€420,000) and Kildare (€385,000), while the lowest price was €159,750 in Longford.
In August, the CSO said there were 4,640 dwelling purchases by households at market prices filed with Revenue, up by 8 per cent on the same month in 2022.
“While interest rates are dampening demand, both house prices and transactions continue to hold up quite well in Ireland,” Dermot O’Leary of stockbroker Goodbody said.
He also noted that momentum in price growth has picked up in recent months, with the annualised rate of growth in the three months to August rising to +6 per cent, up from -6 per cent in the first quarter.
“There has been similar momentum in both Dublin and outside Dublin over this period,” he said. “Over the past 12 months, the higher priced areas in the capital have been the weakest. It is likely that higher interest rates are having a bigger impact at the higher end of the market,” he said.
Trevor Grant of the Association of Irish Mortgage Advisors said: “The continued slowdown in property price growth, combined with the recent extensions and changes to the Help to Buy and First Home schemes, will hopefully assist some first-time buyers to get their foot onto the property ladder in the coming months and year – if they can find a home.”