Dublin house prices decline by 1.9% as higher interest rates deter buyers

House prices across the State rose at an annual rate of 1.4 per cent in September, marginally up on the previous month, but still anchored near a three-year low as higher interest rates dampened buying activity.

The latest residential property price index, compiled by the Central Statistics Office (CSO), shows that prices in Dublin continued to decline, however. Values in the capital fell at an annual rate of 1.9 per cent, the sharpest rate of drop since 2012 when the market was still mired in the financial crisis. Prices outside Dublin rose at an annual rate of 4 per cent.

The State’s property market has slowed significantly since a pandemic-driven surge in 2020 and 2021. The recent softening of headline price growth and the reversal in Dublin comes on the back of 10 consecutive interest rate rises from the European Central Bank, which have made it more expensive for buyers to borrow.

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The softening is perhaps best illustrated by a slowdown in transactions.

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The latest CSO data indicates 4,255 house purchases were filed with Revenue in September. This represents a 7.2 per cent decrease compared with the 4,583 purchases in September 2022 and an 8.3 per cent decline compared with the 4,640 purchases in August this year. The total value of transactions filed in September was €1.6 billion.

Households paid a median or middle price of €320,000 for a dwelling on the residential property market in the 12 months to September, the CSO said.

The Dublin region had the highest median price (€435,500) in the year to September. Within the Dublin region, Dún Laoghaire-Rathdown had the highest median price (€635,000), while South Dublin had the lowest (€405,000).

The highest median prices outside of Dublin were in Wicklow (€425,000) and Kildare (€387,500), while the lowest price was €160,000 in Longford.

Property prices in the Republic have increased by 131.7 per cent from their trough in early 2013. Dublin residential property prices have risen by 129 per cent from their February 2012 low, while residential property prices outside the capital are 141.9 per cent higher than at the trough, which was in May 2013.

“Home prices in Ireland continue to be resilient in the face of rising interest rates, particularly in the new homes sector where prices rose 10 per cent year on year in quarter three,” Goodbody economy Dermot O’Leary said.

The headline rate “continues a trend of ongoing modest house price growth in Ireland, but the recent trend has in fact been stronger, despite the interest rate increases seen over the past 12 months,” he said.

Commenting on the CSO Residential Property Price Index for September published today, Brokers Ireland said the trend of recent months was continuing with prices in Dublin down and up elsewhere.

Rachel McGovern, director of financial services at Brokers Ireland, said: “What is notable is the year-on-year drop in volume of sales by 7.2 per cent and a decrease of 18.6 per cent in the number of new dwellings transacted year on year in September.

“This is likely to reflect the pressure of increasing interest rates which have undergone 10 upward movements since July 2022,” she said.

But she said, nonetheless, there is still high demand, with a high proportion of buyers purchasing with little or no borrowing and huge intergenerational support helping many young people to get a foothold in the market.