Rate of growth in prices being sought for properties slows to 6% – MyHome.ie report
The annual rate of growth in prices being sought for properties nationally slowed to 6% in the final three months of 2022, a new report from property website MyHome.ie concludes.
The report suggests a continuation of the trend whereby prices in Dublin are rising at a slower pace than those in the rest of the country, with asking prices being sought in the capital rising by 3.6% compared to 7.6% outside of Dublin.
The latest official figures from the Central Statistics Office pointed to annual growth in transaction prices slowing to a 15-month low of 9.8% in October.
As the report from MyHome.ie – as well as its counterpart, daft.ie – are based on asking prices, they often act as a leading indicator for the official figures.
On a quarterly basis, the MyHome report captured a fall in asking prices between October and the end of the year.
Prices being sought nationally were down 0.4%, with Dublin prices 0.8% lower and a drop of 0.2% being recorded in the rest of the country.
Joanne Geary, Managing Director of MyHome.ie pointed out that it wasn’t unusual to see a reduction in prices being sought in the fourth quarter.
“Asking prices tend to fall toward the end of the year. For example, they declined by 1.1% on average in the last quarter pre-pandemic. While asking price increases have cooled, the market has still remained remarkably resilient despite the uncertain environment,” she added.
The latest moves saw the median asking price for new instructions nationally standing at €330,000. While the price in Dublin was €436,000, elsewhere around the country it stood at €283,000.
Conall MacCoille, Chief Economist at Davy – who authors the MyHome reports – said that, despite the apparent slowdown in property price growth, it appeared the market had held up better than anecdotal evidence had suggested in 2022.
“The number of vendors cutting their asking prices is still at low levels. Also, transactions in Q4 were still being settled above asking prices, indicative of a tight market,” he explained.
“There are 15,000 properties listed for sale on MyHome.ie, an improvement from the beginning of 2022 but below pre-pandemic levels exceeding 20,000,” he added.
Joanne Geary said the low stock of available properties was a cause for concern.
“Stock levels are improving but are still not running at the levels we need to see in order to satisfy demand. As such, we hope to see inflationary pressures ease in the construction sector over the coming months,” she said.
Conall MacCoille said inflationary pressures were having a negative impact on the homebuilding sector where a slowdown in housing starts was recorded in recent months and the construction PMI surveys pointed to the flow of new development drying up.
“We still expect housing completions will pick up to 28,400 in 2022 and 27,000 in 2023,” he said.
“However, the outlook for 2024 is far more uncertain. The government’s ambitious plans to expedite planning processes are welcome although, as ever, the proof will be in the pudding,” he explained.
The report comes against the backdrop of rising interest rate across Europe with more rate hikes expected in the months ahead, which the main lenders here are likely to pass on to borrowers with greater regularity.
Mr MacCoille said that even if mortgage interest rates rose to 4%, debt service ratios were unlikely to become stretched and there would be only a limited headwind to house prices.
However, he warned that buyers were stretched to a degree not seen since 2009.
“The average residential transaction in Q3 2022 was €370,000, now 7.7 times the average income of €48,000. This is a similar valuation multiple to the UK, where house prices are now falling due to a surge in mortgage rates above 6%.”
He noted that already stretched valuations in Ireland could be exacerbated by the Central Bank’s decision to ease mortgage lending rules to four times’ income.
He said this could add further upward pressure to the house price inflation estimate for this year which he predicted would reach around 4%.
“We’re sticking with that,” Mr MacCoille told Morning Ireland.
“The headwinds are the ECB raising interest rates. We don’t expect them to be fully passed on to mortgage holders but rates will increase and it will hurt,” he explained.
He said there was a lot of demand stimulus in the housing market, including the Central Bank relaxation of the lending rules and the Government schemes to assist first-time buyers.
“The question is how quickly that will push up prices but it will push up prices in the long term,” he concluded.
Article Source: Rate of growth in prices being sought for properties slows to 6% – MyHome.ie report
– Brian Finn – RTE