Asking prices for homes fell 0.3 per cent in the first quarter of 2023, with the “modest slowdown” in prices occurring despite continuing constraints in the supply of housing, according to the latest quarterly property price report from MyHome.ie.
While asking prices have now retreated for three consecutive quarters, they remain 3.2 per cent higher year-on-year.
The median asking price nationally in the first quarter stood at €310,000. Homes are now being sold for just 1 per cent more than asking prices, compared to a 6 per cent difference a year ago, said the property website, which is owned by The Irish Times.
In Dublin, the median price was €395,000, which was down 0.8 per cent compared to the fourth quarter of 2022 and is just 0.6 per cent higher year-on-year.
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House prices in the city have now fallen for four consecutive months and are 2 per cent below where they stood in September 2022. Stretched valuations are concentrated in the capital, with the average price in January 2023 coming in at nine times’ average income.
Outside Dublin, the median price nudged up 0.2 per cent to €265,000 in the first quarter and still stands 5 per cent above levels seen a year ago, with “very low” levels of housing stock responsible for the continued gains.
There were 13,600 properties for sale on MyHome.ie in the first quarter, which is still well below the pre-pandemic figure of 20,000.
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Davy chief economist Conall MacCoille, the author of the report, said the data suggested that frothy pandemic-era valuations were now cooling off, but the Irish property market was not in free fall.
“First, demand remains buoyant given the resilient performance of the Irish economy. Second, housing supply remains very constrained,” he said.
“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.”
Mr MacCoille said the forecast for asking price inflation in 2023 had been revised to 1.5 per cent – down from 4 per cent.
“This small rise could quite possibly split between falls in the capital and modest price gains in the rest of Ireland. However, the outlook is uncertain and small price falls can’t be ruled out,” he said.
“Asking prices have clearly had a weak start to 2023. Also, the correction in stretched valuations in some areas looks to have further to run. However, as 2023 progresses the tight market, resilient economy and, crucially, the easing of the Central Bank’s mortgage lending rules should support Irish house prices.”
MyHome.ie managing director Joanne Geary said low stock levels remained a big concern.
“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.”
Meanwhile estate agent Savills has forecast the office leasing market to pickup in the coming months. This will be driven by strong demand from the State, it said.
“Overall, we expect the first half of 2023 to be characterised by relatively softer activity following last year’s absorption of pandemic-related pent-up demand,” said Andrew Cunningham, director of office agency for Savills.
“However, the State is likely to support demand in the year ahead as deadlines for its ESG agenda and carbon emissions reductions continue to approach. In addition, revisions to the Energy Performance of Buildings Directive will require both the public and private sectors to accelerate their sustainability efforts, necessitating further activity in the market.”
