A further quarter point cut in European Central Bank (ECB) interest rates is seen as almost certain on Thursday, as policymakers fear Donald Trump’s sweeping tariffs risk pushing the bloc into recession.
Investors now expect two further cuts by the end of this year, with the chance of a third, according to Bloomberg data.
Falling interest rates risk pushing property prices higher at a time when the Central Statistics Office says prices are now nearly 20 per cent higher than their 2007 peak before the subsequent property crash.
A decline in the number of homes sold in February largely failed to arrest rising home purchase prices, the Central Statistics Office (CSO) said on Wednesday, with house and apartment prices rising by 8 per cent since February 2024.
The latest official figures reveal that 3,245 dwellings were purchased in February, down 14 per cent from January and 2.5 per cent from February 2024.
Still, home prices grew at an annualised rate of 8 per cent from February 2024, down only slightly from an annual rate of 8.2 per cent in the 12 months to January, according to the CSO’s latest residential property price index.
It follows a period of drastic house price inflation last year in which prices increased at almost twice the rate they did in 2023 as the stock of available homes for sale slumped to new lows.
House prices in the Republic are now 18.8 per cent higher than they were in May 2007, the peak of the pre-crash property bubble, the CSO said on Wednesday. Dublin prices were 4.4 per cent higher in February than at the height of the previous property boom.
Commenting on the figures, Ian Lawlor, managing director of housing development lender Roundtower Capital, said the latest figures show Irish house prices continue to soar and a generation of young would-be homeowners remain priced out of the market.
“The nub of the issue is that not enough homes are being built,” he said. “Ultimately, unless there’s a significant increase in housing delivery, steep house price inflation will persist and homes will continue to be unaffordable for a large cohort of young people.”
Trevor Grant, chairman of Irish Mortgage Advisors, said that while the annual rate of growth has slowed, prices are still rising steeply and there needs to be an “exponential increase” in the number of new homes being built. “However, unfortunately, there is no sign of this happening any time soon. The Central Bank recently forecast that Ireland would miss its housing targets for the next three years.”
Property prices rose by 7.1 per cent in February from the same month last year, down from a rate of 7.5 per cent in January. Prices outside Dublin were up 8.7 per cent year-on-year, down from 8.6 per cent.
At €475,000, the Dublin region had the highest median property price in the Republic in the year to February, within which, Dún Laoghaire-Rathdown had the highest median price at €670,000, while Fingal had the lowest at €450,000.
Nationally, the median price of property in the 12 months to February was €360,000, up slightly from €359,999 in the year to January, the CSO said.
The latest figures heap additional pressure on the Government, which is yet to unveil its new housing plan. Fianna Fáil and Fine Gael have faced steep criticism in recent months for failing to meet their housing targets last year, despite claiming during last year’s general election campaign that 40,000 houses would be built by the end of 2024.
“The Government’s awaited new housing plan must involve a fundamental shake-up in the State’s response to housing,” said Rachel McGovern, deputy chief executive at Brokers Ireland. “For far too long, over a decade, we’ve accepted piecemeal, incremental growth in supply at a time when our population has been growing rapidly.”
A quarter-point cut in on Thursday, which would be the seventh consecutive reduction by the ECB, and another in June “have really become a no-brainer”, according to Frederik Ducrozet, head of macro research at Pictet Wealth Management, who said any other decision would be “a disaster”. - Additional reporting copyright The Financial Times Limited 2025
