The latest figures from the Central Statistics Office show that house price growth is slowing, but not by enough. The annual increase in prices fell to 6.6 per cent in November, down from 7.2 per cent in October. The monthly rise was just 0.3 per cent.
Unfortunately, the slowdown in price growth does not appear to be driven by increased supply. The number of transactions fell in November both for new and second-hand homes. Instead, it appears likely that affordability – or the lack of it for many buyers – has slowed price inflation a bit. Even so, the growth rate of prices is still ahead of average wage growth and so affordability will be getting more stretched for many.
The Government will hope that its new strategies to accelerate housing and infrastructure delivery will soon start to lift supply levels. It may have to endure some political pain first. Final completion figures for 2025, to be published next week, may well be in the mid 30,000s, well below the kind of levels needed to achieve the target of 300,000 during the Government’s term.
Acceleration was always going to take time but, as it has done with its climate targets, the Coalition may have to accept that this one, too, will not be reached. Still, Davy stockbrokers believe the figures will start heading in the right direction, with more than 40,000 completions this year and 50,000 possible in 2027.
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Demand will still exceed supply for some time to come, barring some reversal in the economy which hits jobs and incomes. Prices could keep heading higher, certainly in parts of the market. Meanwhile, the low level of activity in the second -hand market is further evidence of a dysfunctional situation with many potential movers effectively stuck where they are due to high prices or lack of supply.
The challenge for the Coalition in 2026 is to show they have momentum in infrastructure and housing delivery. If they fail, they will be two years into their term with little to show for it. This should propel Ministers into action. But it remains to be seen if it will.
