New data from property listings website MyHome.ie has found that asking prices for homes fell by 0.3% in the first three months of the year when compared to the previous quarter.
The drop marks the third consecutive quarter that advertised prices for homes around the country have fallen.
Nationally, though, listed prices are still up 3.2% in comparison to the same three months in 2022, despite the slowdown.
The report, compiled in conjunction with stockbrokers Davy, found the median asking price for a home nationally is now €310,000.
“We expect the 0.6% decline in the CSO’s RPPI measure of transaction prices in January will continue in the coming months,” said Davy chief economist Conall MacCoille.
In Dublin, where prices fell 0.8% compared to the previous quarter, but are up 0.6% versus the first quarter of last year, the median home price sought was €395,000.
Prices in Dublin have now dropped for four consecutive months, leaving them 2% below the levels recorded in September of last year.
However, outside of Dublin asking prices actually rose 0.2% from quarter to quarter, and by 5% over the past year, driven by stock levels being so low.
That leaves the median asking price for a home outside the capital at €265,000.
New mortgage rules came into force at the start of the year allowing first time buyers to borrow more.
Speaking on Morning Ireland, Mr MacCoille said this is likely to push house prices up in the second half of the year.
“It will probably be a broadly flat year for house prices, maybe slightly up or down – but by no means are we seeing a resolution to all the issues in the housing market,” he said.
Some countries such as the UK and US are seeing sharp drops in property prices, but Mr MacCoille said that will not be replicated here.
Overall, there was only 13,600 available properties for sale on MyHome.ie during the quarter, well below the pre-pandemic figure of 20,000.
“Unfortunately, stock levels are still a major concern,” said Joanne Geary, Managing Director of MyHome.ie.
“In an ideal scenario, we need approximately 50,000 new homes built every year, and we are running far short of that target at present.”
“We know from our recent consumer sentiment survey that prospective homebuyers are feeling the pinch from the energy and cost of living crises, so now more than ever we need construction activity to ramp up to alleviate the build-up in pressure.”
Mr MacCoille said around 27,000 new homes are expected to be completed this year.
“That might even be exceeded, potentially,” he said.
“But it will likely be down on 2022 because of some of the slowdown in construction due to build cost inflation,” he added.
The authors found that homes are now being sold for just 1% above asking prices, versus 6% this time last year, a further indicator of the froth disappearing from the market as interest rates rise.
“As affordability has become stretched, people can’t afford to be bidding over the asking price – and that might go towards zero in the next couple of months,” Mr MacCoille said.
The analysis also found that the property market is experiencing a correction of stretched valuations from the pandemic years, particularly in Dublin where the average price in January was nine times’ average income.
It also found that rent inflation in Dublin has exceeded 2% despite the capital being designated a rent pressure zone.
Mr MacCoille has predicted that despite the softening in prices, Ireland’s property market will perform better than markets like the US and UK.
“First, demand remains buoyant given the resilient performance of the Irish economy,” he said.
“Second, housing supply remains very constrained. Third, the European Central Bank is not expected to raise interest rates as aggressively as the Bank of England or Federal Reserve.”
“Fourth, the surprise decision by the Central Bank of Ireland to loosen the mortgage lending rules will in time put upward pressure on house prices.”