The Irish property market’s “disproportionate reliance” on high income earners working in multinational sectors would see it vulnerable to any sudden economic shock such as a trade war, according to MyHome’s latest property report.
The report, which covers the first quarter, notes that the outbreak of a trade war between the United States and the European Union would hit demand for housing in Ireland this year and could act as a brake on asking price inflation,
“The threat of a trade war will influence how the housing market will perform this year,” it said.
“However, the housing market’s record low supply levels and continued strong demand means that our forecast of 5 per cent asking price inflation for 2025 may prove too conservative if a trade war does not materialise.”
MyHome managing director Joanne Geary said it “stands to reason” any shock to our economy would have a “knock-on effect on housing market demand”.
owever, “robust demand and inadequate supply” are still the hallmarks of the Irish housing market, she said.
Irish house prices are now eight times average incomes of €51,000, their most stretched level since 2009, with one in seven properties being sold for an “astonishing” 20 per cent over the asking price, Ms Geary said.
“More than any other type of unit, we need to see more urban apartments being built, so it was particularly disappointing to see apartment completions down by 24 per cent in the last year.
“We do expect to see a pick-up in completions this year, however, with the equivalent of two years of apartment supply under construction in September 2024.”
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MyHome, which is owned by The Irish Times, said that at the median, asking prices rose by another 1.7 per cent to €300,000 in the first quarter, with annual house price inflation steady at 8 per cent.
“Despite stretched affordability, house prices look set for another robust gain,” the report said. “Here, our forecast for 5 per cent inflation in 2025 could prove too conservative.”
Bank of Ireland chief economist Conall Mac Coille said the “key driver” remains the 5 per cent pace of pay growth, accompanied by rising leverage among first-time-buyers following the relaxation of the mortgage lending rules.
The average mortgage approval was €318,400 in January, up 7 per cent on 2024, pointing to “further price gains”.
Mr Mac Coille said the extent of the tightening housing market was “still striking” with just 10,800 homes listed for sale on MyHome at the end of March, which was a fresh record low.
The sale agreed time now stands at 11 weeks, which he said shows that whatever homes are for sale are being “snapped up” ever more quickly.
In addition, he said it was “especially worrying” that sellers are being “put off” by concerns around “difficult bidding processes, artificially low asking prices, or the risk of failing to secure a home once they sell their own”.
On supply, the report said the 67,000 housing starts recorded last year “clearly didn’t reflect underlying activity levels”, but rather developers “rushing to avail of waivers on local authority and water infrastructure charges”.
MyHome said it does expect some pick-up in housing completions in 2025. Completions of scheme houses rose to 16,200 in 2024, or including one-off houses to 21,600. In both cases these were the highest levels attained since the Celtic Tiger era.
It said the “disappointing” 30,000 completion figure for 2024 reflected apartment completions being down 24 per cent on the year.
All that being said, the report said it still makes more sense to buy than to rent. With average rents now €1,693 and €2,226 in Dublin, rental yields exceed 4.5 per cent in all but two counties.
