Irish house price inflation is cooling for the first time in almost two years

Irish house price inflation is cooling for the first time in almost two years

Housing price inflation has slowed for the first time in almost two years, perhaps a sign that the current cost of living pressure may dampen demand. According to the latest house price index, property prices rose nationally by 14.2 per cent during the year to April, down from a rate of 15.1 per cent in March.

In Dublin, house prices rose by 11.5 per cent, down from 12.7 per cent in March, while property prices outside Dublin were 16.4 per cent higher than the previous year.

The latest data also shows that real estate transactions decreased by 12 percent to 3,138 in April, another sign of cooling in the market, while the total value of transactions for April amounted to 1.1 billion euros.

Prior to April, price growth in the state real estate market had increased almost continuously since the beginning of the pandemic, due to factors such as increased savings, teleworking and lower-than-expected supply. However, cost-of-living problems combined with the prospect of higher interest rates – the European Central Bank signaled earlier this month that it would start raising interest rates next month – are expected to see a significant slowdown in price growth.

The Central Bureau of Statistics said real estate prices in Dublin were now 10.2 per cent lower than the peak in February 2007, while residential property prices in the rest of the state were 3.2 per cent lower than the peak in May 2007.

The latest figures show that the average price paid for a home in the republic in the 12 months to April was € 334,722. The average price paid in Dublin (€ 512,502) was the highest in any region or county. Dún Laoghaire-Rathdown had the highest average price in the Dublin region at € 713,514, while southern Dublin had the lowest at € 407,734.

The border region was the cheapest region during the year until April 2022, with an average price of € 176,488. Longford (in the Midland region) was the cheapest county, with an average price of € 151,558.

“While price growth is still much higher than before the pandemic, we are now comfortable with the fact that house price inflation has exceeded the peak of the cycle,” said Goodbody Stockbrokers. “Rising cost of living and higher mortgage rates suggest that a further slowdown will occur in the coming months. However, the supply shortage remains acute, which limits the extent of weaker price dynamics in the coming quarters despite rising domestic and international risks,” it added.

KBC Bank Ireland economist Austin Hughes said: “Monthly house price movements may be choppy but April data suggest we may see the start of a movement towards a significant slowdown in Irish house price inflation.”

Mr Hughes noted, however, that the average price paid for housing nationally in April (just under € 335,000) was 7.4 times the average income (€ 45,000).

Trevor Grant, chairman of the Association of Irish Mortgage Advisors, said potential homeowners are understandably worried that property values ​​could fall in the near future, “but that does not seem likely given that demand will continue to outstrip supply.”

“Supply is steadily increasing, which should facilitate the growth of property prices, but on the other hand, the rising costs of raw materials and rising labor costs may continue to increase upward price pressure,” he said.

Prospective homebuyers want to know if they should move now or wait, hoping that prices can be reduced. No one can say with any degree of certainty what will happen to prices, but there definitely seems to be room for further increases, so if you have the opportunity to buy now – and especially if you are currently renting, then it may be best to move on with your plans, ”he said.

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