House asking prices jump 9% in ‘aggressive’ market

Asking prices for Irish houses are currently running 9 per cent higher than a year ago, according to two separate reports, both of which highlight that prices outside of Dublin are accelerating faster than in the capital.

Still, the overall rate of inflation noted in the latest quarterly reports from property websites MyHome.ie and Daft.ie was down from the 13 per cent rate flagged by both in their second-quarter reports, published at the end of June.

In Dublin, average prices rose by 4.9 per cent to €399,323 in the 12 months to September, the slowest rate of inflation in a year, according to Daft.ie.

Outside the main cities, growth is running at an average of 12.9 per cent, the Daft.ie report showed, with prices in Mayo and Leitrim soaring more than 20 per cent. Property price inflation is running at more than 17 per cent in Waterford, Roscommon and Clare.

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The author of the MyHome.ie report, Davy economist Conall MacCoille, said the rate at which prices are rising highlight that the “market is still starved of supply, with prices being bid-up aggressively by homebuyers”. He said there are signs that transaction prices are growing at a faster rate than asking prices.

“For a limited pool of 450 properties sold during the summer, we have calculated the transaction price was 6.5 per cent higher than the asking price, compared with a premium of 2.7 per cent in [the second quarter of] 2021,” he said, adding that he now sees official house price inflation ending the year at 10 per cent, compared to his previous estimate of 8 per cent.

There are currently 13,500 properties listed for sale on MyHome.ie – a property website owned by The Irish Times media group – up only slightly from 12,700 three months ago and still well down on about 20,000 before the start of the pandemic in early 2020.

While the Banking & Payments Federation Ireland (BPFI) recently estimated that house completions will amount to 22,000 this year and rise to 27,000 in 2021, Mr MacCoille said: "Given population growth is adding 30,000 units at a minimum each year, coupled with circa 100,000 units of latent demand built up over the past decade, it will take some time before homebuilding can start to address the housing shortage."

The Davy economist said excess demand is particularly evident in the Irish mortgage market, which saw 42,600 home loan approvals and just 31,300 drawdowns in the 12 months to June. “This implies in excess of 25 per cent of would-be homebuyers with mortgage approval are now failing to secure a property,” he said.

Daft.ie said that the average price nationwide in the third quarter of 2021 was €287,704, 22 per cent below the Celtic Tiger peak but three quarters above its lowest point in 2012.

The MyHome.ie report, meanwhile, put current asking price inflation at 7.3 per cent in Dublin and 10.1 per cent for the rest of the country.

The Daft.ie report's author, Trinity College Dublin economist Ronan Lyons, said that delivering additional supply is key to solving Ireland's "chronic housing shortage". He said that while the Government's Housing for All plan, unveiled earlier this month and which aims to deliver 300,000 new homes by the end of the decade, contains a "welcome boost" in social housing activity, "construction costs, the key determinant of viability, do not appear to be on policymakers' radars".