The rate of growth in prices being sought for properties listed on the market slowed in 2023, despite a significant drop in supply, according to the website, Daft.ie.
Its latest analysis captured growth in listed prices of 3.4% in the year – almost half the 6% growth rate in 2022 and well below the increases of 8.1% and 7.7% seen in the two years prior to that.
The report noted that just 11,100 homes were listed for sale on the Daft.ie website on December 1st – 27% lower than on the same date a year previously and down dramatically on the pre-Covid average of 25,000 homes for sale at any particular time.
“Housing prices are stabilising not because supply has increased to meet demand, but instead because demand has fallen to meet it,” Ronan Lyons, Economics Professor at Trinity College, Dublin and author of the reports for Daft.ie said.
“Supply of newly built homes for purchase has certainly increased but the second-hand market, which is the larger share of the market, has been working in the other direction, buffeted by changed economic conditions” he added.
The changed economic conditions include substantial hikes in interest rates in response to inflation which have made it more difficult for certain cohorts of potential buyers to make a purchase.
However, inflation has rapidly fallen back close to the 2% target rate favoured by Central Banks which is seen as heralding rate cuts ahead.
“If uncertainty continues to fade, and potentially interest rates start to fall again, it may be the case that 2024 sees the second-hand market recover,” Ronan Lyons noted.
Regional and quarterly variations
The report captured some substantial variations in price movements by region throughout the year and within each of the quarters.
The typical listed price nationwide in the final three months of the year was €320,046, 1.5% lower than in the third quarter and roughly 14% below the Celtic Tiger peak.
Having fallen in the first three months of the year, prices increased again in the second and third quarters, according to the figures compiled by Daft.ie.
The listings website also noted significant differences in price trends across the country.
Prices in Dublin rose by an average of 2% during 2023, while in the rest of Leinster, the increase was 0.8%.
Cork city saw prices rise by 3.7% during the year, while Galway city saw an increase of 4.1%.
Increases in Waterford and Limerick cities were bigger again at 6.1% and 9% respectively.
Outside the cities, prices were 6.8% higher in Munster and 8.3% higher in Connacht-Ulster in the final quarter of 2023 than a year previously.
Commenting on the report, the Institute of Professional Auctioneers & Valuers, IPAV, said the availability of homes at affordable prices for those on average wages is the main issue impacting the market.
Pat Davitt, CEO of IPAV, said impediments to home ownership for the average wage earner have been growing – the latest being the series of 10 interest rate hikes by the ECB.
“This means activity in the housing market is largely confined to those on higher than average incomes and those who are in the fortunate position to be able to buy homes without needing a mortgage, or perhaps a small supplementary mortgage. This latter group could be as high as 40%,” he said.
Mr Davitt said the situation would be more pronounced only for the existence of State schemes such as the Help-to-Buy and the First Home scheme.
“In 2024 the Government needs to look urgently at addressing deep impediments that have changed little over the last decade, including, the high State take on home building; planning policy chaos and policy makers and influencers antipathy towards, and fear of, being seen to aid SME builders and developers who have traditionally been the mainstay of the Irish home building sector,” he concluded.
Article Source – House price growth slowed in 2023 as supply dwindled – RTE