Lofty valuations and the excessive expectations of sellers have finally “taken a toll” on house prices, as the rate of growth in prices slipped back to 7.8 per cent from 10.9 per cent in the three months to the end of September, according to a report from property website MyHome.ie.
The housing market is now beginning to “cool off”, according to MyHome’s Q3 Property Price Report. It said the asking prices for homes nationally fell by about 1.3 per cent in the third quarter when compared to the previous three-month period. It said this was due to “seasonality” in the market, which typically sees less activity in the late summer months, and demand remains “robust”.
Myhome.ie says its research shows the housing market is now entering a more “normal” period after several years of galloping price growth and constrained supply. The number of houses for sale on MyHome’s website is growing strongly, up by almost one-third compared to last year.
The median asking price in Q3 on MyHome.ie for a house in Dublin was €420,000 and €275,000 outside the capital. Asking prices in Dublin were 6.2 per cent ahead of the same period a year ago, while they were 9 per cent ahead in the rest of Ireland.
“Stretched valuations and overly exuberant expectations among vendors are taking a toll on pricing,” said Cathal MacCoille, the chief economist of Davy stockbrokers. He wrote the report for MyHome.ie, which is owned by The Irish Times media group.
Mr MacCoille said rising interest rates would lead to slower price growth but the seasonal fall in asking prices was not an indicator that prices were now set to fall persistently, as there was still plenty of pent-up demand. He expects house prices to grow by 6 per cent this year and 3 per cent in 2023.
He highlighted that 16 per cent of all mortgage approvals in the first six months of the year had not been drawn down, which he said indicates a cohort of “frustrated buyers” are still out in the market.
The supply of homes available to buy has risen sharply in recent months. There were 16,300 homes listed on MyHome.ie in September, an increase of 46 per cent since the start of the year.
“This supply is badly needed, as demand is still particularly strong. On MyHome.ie, leads are up by 27 per cent and brochure views are up 15 per cent compared to this time last year,” said Joanne Geary, the managing director of MyHome.ie.
But the report also warns of a slowdown in new house starts, due to supply-chain and cost issues. Ms Geary said this was a “concern” for the supply of homes available to buy.