Dublin’s housing market is slowing faster than the rest of the country but homebuyers everywhere are still more “stretched” now that at any stage over the last 14 years, according to a new report.
The fourth-quarter housing report from property website Myhome.ie shows that asking prices fell 0.4 per cent in the final three months of the year, the second consecutive quarter of decline. The average asking price of houses advertised on the site was still 6.1 per cent higher compared to a year ago, but the rate of annual rate of increase was down from 7.8 per cent.
The median asking price of a house nationally was €330,000, although there is a stark difference between prices in Dublin and the rest of the country. The median price in the capital was €436,000 compared to €283,000 elsewhere.
Dublin is witnessing a “more pronounced slowdown” in asking prices, according to the report from Myhome, which is owned by the company that publishes The Irish Times. Asking prices in the capital fell by 0.8 per cent in the final three months of the year, double the rate of decline nationally. Meanwhile, prices in Dublin were 3.6 per cent higher at the end of 2022 compared to the previous year, which was less than half the rate of increase recorded elsewhere.
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Despite the recent slowdown in the prices sought by sellers, the report highlights the severe financial pressure facing people who are trying to buy homes. It also warns that recent changes by the Central Bank to loosen mortgage lending rules could make the situation even worse for homebuyers.
Price correction
The average sale price for a house in Ireland of just over €370,000 is now 7.7 times the average income, the highest the ratio has been since 2009. The price-to-income multiple here is now similar to the UK, where a correction in house prices is well under way.
“It is quite possible that a degree of froth exists in the Irish housing market that could continue to unwind in early 2023,” said Davy economist Conal MacCoille, in commentary attached to the report.
The report notes that despite headwinds such as inflation and economic upheaval caused by the war in Ukraine, house prices showed “resilience” in 2022. However, the market enters the new year with an “especially uncertain outlook”, as interest rates rise and incomes are squeezed.
Many sellers seem still reluctant to cut prices, however. Just 3.2 per cent of properties had their asking prices reduced in the fourth quarter. The report suggests there may be a “risk … that vendors or estates are slow to accept changed market conditions and settle transactions below asking prices”.
Myhome’s data shows that sellers who do choose to cut asking prices are doing so faster than previously, waiting an average of 17 weeks to cut prices compared to 22 weeks in 2021. Just 0.66 per cent of properties saw their asking prices increased in the fourth quarter, according to Myhome’s data. This was the lowest level the second quarter of 2020, when the arrival of the pandemic temporarily upended the market.
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There were 15,000 homes available for sale on Myhome in the fourth quarter, an increase on the stock a year ago but still well below the pre-pandemic average of 20,000.
“Stock levels are improving but are still not running at the levels we need to see in order to satisfy demand,” said Joanne Geary, managing director of Myhome. “While asking price increases have cooled, the market has still remained remarkably resilient despite the uncertain environment.”
