House “asking prices” are rising at their fastest rate in two years, and one in seven homes is selling for 20 per cent above those figures, according to the latest quarterly house price report from MyHome.ie.
The “intense pressure” on a “seriously undersupplied” housing market contributed to a 7.5 per cent increase in national asking prices over the past 12 months, MyHome.ie said in the report, produced in association with Bank of Ireland.
Rising average earnings and record mortgage approval values are helping to swell demand, the report said.
Inflation in asking prices is lower in Dublin at 6.2 per cent year-on-year, but the rate is accelerating to 8.5 per cent outside the capital.
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The median asking price nationally in the third quarter of 2024 was €365,000, MyHome.ie’s analysis found. It was €455,000 in Dublin, while elsewhere it was €315,000.
With 14 per cent of homes are now selling for more than 20 per cent over the asking price and the median premium over the asking price of 7 per cent, the market is running “even hotter now than in the summer of 2022″.
The reports also found that the State would need to deliver an additional 206,000 homes this year alone if it were to match the UK’s housing-to-population ratio, far greater than the 33,000 completions expected this year,
Despite the strong demand, residential transaction volumes in the first half of 2024 are down 5 per cent compared to the same period last year, signalling a lack of available housing stock that is constraining the market.
The number of properties listed for sale on MyHome.ie last month was just 13,100, a figure that is well down on pre-pandemic levels of more than 20,000.
The average time to sale agreed was just 12 weeks in the third quarter, close to a historic low, indicating that whatever properties do go on sale are snapped up quickly.
Conall Mac Coille, chief economist at Bank of Ireland, said the “overarching concern” is that the tight housing market may now be “feeding on itself”, with would-be vendors put off by the fear that they will fail to secure a property once they sell their own home.
Although the rise in housing commencements to 49,000 over the year to July is a promising step-up in activity, he said, the rush of activity in advance of the expected expiry of waivers on local authority development levies and infrastructure charges means it is hard to gauge when these starts will translate into completions.
In the meantime “exceptional” rates of employment and population growth not seen since the 2007-08 Celtic Tiger period are “inevitably” placing pressure on the housing market.
“A simple way to illustrate this is to ask how many homes Ireland would need to build to match the UK’s housing-to-population ratio. Our report shows that to ‘catch up’ with the UK’s housing stock we would now require an additional 206,000 homes, versus 138,000 in 2020,” Mr Mac Coille said, pointing to a widening gap despite all the steps taken by the Government over its term.
The broad takeaway from the MyHome.ie asking price data is that the CSO’s official measure of house price inflation, based on transactions, looks set to peak in the coming months, he concluded. Looking ahead to 2025, Mr Mac Coille said another mid-single digit price gain looks likely next year.
“It is heartening to see housing starts continue to rise as well as expectations that housing completions will exceed 40,000 units next year,” said Joanne Geary, managing director of MyHome.ie, which is owned by The Irish Times. “This is the kind of trend we will need to see for years to come to redress the imbalance in the market, as epitomised in this latest report by our performance relative to that of the UK.”
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