House prices could be largely stable this year as the second-hand market recovers from several years of economic uncertainty and the number of new homes built continues to grow, one expert predicts.
In its House Price report, published on Tuesday, property website, Daft.ie calculates that prices rose by 3.4 per cent on average last year. That compares with a 6 per cent rise during 2022 and increases of 8.1 per cent and 7.7 per cent in 2021 and 2020. With the exception of 2019, when prices fell by 1.2 per cent, it is the smallest increase in prices since 2013.
Ronan Lyons, associate professor in economics at Trinity College Dublin, says that if economic uncertainty continues to fade and interest rates start falling, the second-hand market could recover in 2024.
“This would likely mean a healthier housing market than for some time, with transactions up but prices largely stable,” he adds.
Builders are likely to have completed more than 29,000 new homes in 2023, beating the Government’s target, and could exceed 30,000 this year, according to official estimates.
Prof Lyons says new home building will remain high for the next year at least, but notes that supply in the larger second-hand market has been going in the other direction, “buffeted by changed economic conditions”.
On December 1st, he says, there were just more than 11,100 homes for sale in the Republic, a figure that is low compared with almost any point over the last 15 years and 27 per cent less than a year previously. It was less than half the 2019 average of 24,200.
The number of houses for sale began to fall in the middle of 2023 and affected all regions of the State, he said, but was most visible in Dublin where there were a third fewer properties on the market, according to the report.
“Housing prices are stabilising not because supply has increased to meet demand, but instead because demand has fallen to meet it,” says the economist.
Daft.ie’s report shows that the typical listed price of a house for sale in the Republic during the final three months of 2023 was €320,046, 1.5 per cent down on the previous quarter.
In Dublin, where the average asking price was €433,613 in the last quarter, prices rose 2 per cent during 2023. They climbed 3.7 per cent in Cork to an average of €337,550 and 4.1 per cent in Galway to €365,813.
Sellers sought €239,709 for Waterford homes in the final three months of last year, following a rise of 6.1 per cent. Limerick sellers benefited from the biggest increase, 9 per cent to €271,203.
Outside the cities, the average asking price was €271,117, up 4.3 per cent, the report states.
The Institute of Professional Auctioneers and Valuers says Daft.ie’s findings broadly concur with the industry group’s own assessment.
“Availability of homes, and at affordable prices for those on average wages, has been and remains the main issue stalking the market for the last decade,” its chief executive, Pat Davitt, says.
He says the European Central Bank’s “unnecessarily excessive interest rate hikes” are the latest in a growing number of barriers to home ownership for working people.
Mr Davitt argues that this rules out about 60 per cent of people who do not earn higher-than-average wages or who are not able to buy homes without borrowing or with just a small supplementary mortgage.
This would be “even more dramatic” were it not for the Help-to-Buy, First Home and other State schemes, he says.
“In 2024, the Government needs to look urgently at addressing deep impediments that have changed little over the last decade,” Mr Davitt warns.
These include high taxes on home building, planning chaos and fear of being seen to aid builders and developers who have been home building’s mainstay.
“We need urgent and practical measures, and we certainly do not need to see the issue treated as a political football in the run-in to elections,” he says.