The Irish housing market appears to be cooling after a period of rapid price increases following the COVID-19 pandemic, but significant challenges remain, particularly regarding supply. New data from property website Daft.ie indicates a slowdown in both listed and transaction prices, offering a glimmer of hope for prospective buyers, though the relief isn’t uniform across the country. Understanding the nuances of this shift – and where the market stands now – is crucial for anyone involved in the Irish property landscape.
The latest Daft.ie report, covering the first three months of 2024, shows that listed home prices increased by 0.6% between December and March. This translates to a 3.7% increase over the past 12 months, the slowest rate of increase since late 2023. Early indications similarly suggest that transaction prices nationally were “stable” during the same period, with the annual rate of increase slowing to 5.6%, also the slowest pace since late 2023. At the end of 2023, the average price nationwide for a three-bed, semi-detached home stood at €435,000, according to Daft.ie.
Signs of a Market Shift
Ronan Lyons, professor of economics at Trinity College Dublin and author of the Daft report, believes the slowing rate of price increases is a clear indication that the market is moving away from the “acute overheating” seen since the pandemic. “This is the clearest sign yet of a market moving away from the acute overheating seen since the pandemic,” Lyons stated in the report. However, he cautioned that the cooling isn’t happening evenly across Ireland. Instead, a more complex pattern is emerging, with urban markets showing signs of stabilization first.
In Dublin, for example, listed house prices rose by an average of 2.5% in the year to March, less than half the 6.3% rate observed in the 12 months to March 2023. This represents the softest rate of increase in the capital since mid-2023. Early figures suggest transaction prices in Dublin fell by 1.1% in the first quarter of 2024, marking the second consecutive quarter of decline. A similar trend is visible in other major urban areas, with average prices in the four largest cities remaining unchanged between December and March and increasing by only 0.7% over the past year.
Rural Areas Show More Resilience
Outside of the cities, the cooling effect is less pronounced. In Connacht and Ulster, excluding the Galway urban area, listed prices increased by 8.2% over the 12 months to March, a rate largely consistent with the first quarters of 2023 and 2024. This divergence between urban and rural areas, Lyons explains, is largely driven by the type of properties being sold.
Second-hand homes dominate the market in Dublin and other cities, and their availability has improved significantly over the past year, increasing by 14%. However, outside of urban centers, “supply constraints remain far more binding,” Lyons noted, “particularly in regions where second-hand availability is still a fraction of pre-pandemic levels.” While increased delivery of new homes is offering some relief, the pressure remains high in areas with limited new construction and subdued second-hand activity.
The Impact of New Construction and Vacant Homes
The slowdown in price growth comes amidst a concerning decline in new housing starts. According to a report by Ireland’s pillar banks, new housing starts fell by more than three-quarters last year, with activity slowing by almost 84% in key local authority areas like Fingal County Council and South Dublin County Council. This reduction in supply could counteract the cooling trend observed in urban areas.
Compounding the supply issue is the significant number of vacant homes across the country. Recent data from the Central Statistics Office (CSO) shows that more than 70,000 homes were vacant at the end of 2023. Addressing this issue – through incentives or potential levies – could significantly alleviate pressure on the housing market.
What This Means for Buyers and Sellers
For potential homebuyers, the slowing price growth offers a window of opportunity, particularly in urban areas. While prices are still high, the reduced competition and potential for negotiation could craft homeownership more attainable. However, the limited supply, especially outside of cities, continues to pose a challenge. Sellers, may need to adjust their expectations and be prepared for a longer selling period, especially if their property is located in an urban area.
The Irish housing market is clearly in a state of transition, adjusting to changing supply conditions and broader economic factors. The current situation is a far cry from the rapid price increases seen during the height of the pandemic, but affordability remains a significant concern for many. The next key data release from Daft.ie, covering the second quarter of 2024, will provide further insight into the trajectory of the market and whether the cooling trend will continue.
What are your thoughts on the current state of the Irish housing market? Share your experiences and opinions in the comments below.
