Asking prices for the average home in the Republic rose almost 11 per cent to €320,000 in the 12 months to June, says a new report.
But cost-of-living fears will slow rocketing demand for houses in the second six months of this year, the MyHome.ie/Davy’s Property Price Report for the second quarter of 2022 predicts.
Its figures show that the average asking price for homes put on the market during the second quarter of 2022 rose 10.9 per cent over the previous 12 months to €320,000.
In Dublin, those prices rose 7.9 per cent to €403,000, while outside the capital they climbed 12.7 per cent to €270,000.
All those figures show a moderation in the rate of growth. In its previous report – for the 12 months to March – MyHome.ie reported house price inflation of 12.3 per cent nationally. Dublin prices were rising at 8.6 per cent annually at that time, with prices elsewhere in the State 14 per cent up on a year earlier.
Nationally prices rose 5.3 per cent from the first to the second quarter of the year. In Dublin that increase was 3.4 per cent, while outside the city prices rose 6.1 per cent from the first quarter to the next.
Conal Mac Coille, Davy chief economist, the report’s author, predicts price inflation will slow in the second half of 2022.
“Double-digit inflation and sharp price gains are set to give way to greater concerns on affordability, the economic outlook and the impact of the European Central Bank raising rates,” he says.
He said evidence from estate agents suggested the momentum behind property price inflation was starting to slow.
However, Mr Mac Coille does not believe a bust will follow the boom in values as it did 14 years ago when a property bubble burst, leading to a long recession. He argues that Central Bank mortgage lending rules, which tie home loans to borrowers’ incomes, have checked the market this time.
“The expected rise in interest rates from the European Central Bank, while notable, will also not have the same negative effect, given the Irish market is well insulated at present,” says Mr Mac Coille.
The average mortgage approved by banks rose 9.4 per cent to €283,700, sending them past the levels they reached before the 2008 property price collapse.
Mr Mac Coille adds that demand for homes is so high that every year one in five of those seeking a property cannot secure one.
A further indication of that demand is the 2.6 months it takes for houses on the market to sell, a record low, according to the economist.
Joanne Geary, managing director of MyHome.ie, says signs of slowing house price inflation suggested the company’s earlier predictions for this year were accurate.
She maintains the rising numbers of homes coming up for sale is encouraging. “However, even though we have seen somewhat of a correction, demand is still far outstripping supply and this imbalance needs to be rectified in order for normality to return,” she says.
The number of properties for sale on MyHome.ie rose to 12,700 in June from 11,200 in March, the report shows. Builders completed more than 5,000 new homes in the first quarter of the year.
Mr Mac Coille said he could not rule out a modest fall in house prices, but maintains that double-digit declines or a repeat of the post-bubble crash seem very unlikely.
