The surge in house prices seen during the pandemic was, believe or not, less pronounced here than in other jurisdictions, a reflection of the Central Bank of Ireland’s strict lending rules, which appear to be moderating the ups and downs.
The slowdown/reversal cycle that seems to be engulfing property markets internationally sending prices the other way is similarly less pronounced here, so far anyway. So while prices are falling in the UK, Canada, New Zealand, South Korea and other countries, prices here are still rising in annual terms.
Officially they were up 6.1 per cent in January. But there’s quite a lag between what’s happening now and the official figures, which are based on transactions that took place months ago.
We had two sets of figures on house prices published in recent days pointing to a softening in price growth on the back of higher borrowing costs and wider inflationary pressures. The latest quarterly monitor from MyHome.ie, which is owned by The Irish Times, indicated that asking prices for homes fell 0.3 per cent in the first quarter of 2023. They remained 3.2 per cent higher year-on-year, however.
Frothy pandemic-era valuations were now cooling off, but the Irish property market was not in free fall, said Davy chief economist Conall MacCoille, the author of the report. “First, demand remains buoyant given the resilient performance of the Irish economy. Second, housing supply remains very constrained.”
MyHome’s report came in advance of Sherry FitzGerald’s latest price gauge which, based on valuations rather than asking prices, showed prices advanced in the first quarter of 2023 but at a subdued pace of 0.8 per cent. Annual inflation was put at 3.6 per cent. The company said the latest valuation figures indicate “that the market is stabilising after a period of strong inflation”.
The industry is confident that supply shortages combined with strong demand will outweigh the impact of higher interest rates, which constrain affordability, and that prices, in annual terms at least, will remain on an upward trajectory. A minority of others think we’ll see a reversal on the back of higher borrowing costs. Let’s see who’s right.
