Irish house prices defy impact of higher interest rates to rise by 4.4% in 2023

Property prices nationally rose by 4.4 per cent last year defying the impact of higher interest rates and a cost-of-living squeeze.

The latest residential property price index for December showed annualised house price inflation has now risen for four consecutive months. Prices were also up by 1.5 per cent on a monthly basis, the fastest level of monthly growth seen in nearly two years.

In Dublin, where supply pressures are most intense, prices were 2.7 per cent higher in December than a year earlier while property prices outside Dublin were 5.7 per cent higher.

The rate of price growth softened significantly in the middle of last year on the back of 10 consecutive interest rate rises from the European Central Bank, which has made it more expensive for buyers to borrow.

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However, various Government help-to-buy schemes have fuelled activity, particularly with the first-time buyer segment of the market. The latest figures showed the price of new dwellings, which are mainly bought by first-time buyers, was more than 9 per cent higher on an annual basis in the final quarter of last year.

In terms of transactions, there were just over 5,000 properties purchased nationally in December. This was 2.9 per cent down on a year earlier but almost 10 per cent up on the previous month. The total value of transactions filed in December was €2 billion.

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The typical or median price paid for a house last year was €327,500. The Dublin region had the highest median price (€444,000) in the year to December. Within the Dublin region, Dún Laoghaire-Rathdown had the highest median price (€622,250), while Fingal had the lowest (€410,000).

The highest median prices outside of Dublin were in Wicklow (€430,000) and Kildare (€394,999), while the lowest price was €165,000 in Leitrim.

“There has been real evidence in recent months of the Irish housing market regaining momentum,” Ian Lawlor of the Lotus Investment Group said. “Predictions by a number of estate agents suggest that house prices will continue their upward climb, particularly in areas outside of Dublin,” he said.

“Based on our own real-time conversations with housebuilders, there is still huge demand for the new developments coming to the market — both in Dublin and beyond,” he said.

Rachel McGovern, director of financial services at Brokers Ireland, said the latest figures may well be, in part, because of easing of fears around further European Central Bank interest rate hikes.

“However, the key point is that we’re not building enough homes to support our growing population or to keep prices stabilised,” she said.

“Without Government support schemes such as the Help-to-Buy and First Home scheme, along with intergenerational financial support, very few people, apart from those on very high salaries, could afford to buy a home,” Ms McGovern said.

She said that leaves the property market still “deeply in dysfunctional territory”.

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