Dublin house prices now falling at sharpest rate in almost three years

House prices in Dublin fell at the fastest annual rate in nearly three years in June as higher interest rates curbed affordability.

The latest Residential Property Price Index from the Central Statistics Office indicated that prices in the capital dropped by 0.9 per cent in June, the biggest yearly drop recorded since October 2020.

Across the State, house prices continued to grow on an annual basis but at a much reduced rate of 2.2 per cent. That was down from 2.6 per cent the previous month and from an annual rate of 14 per cent in June 2022. Prices outside the capital rose at annual rate of 4.5 per cent in June.

On a monthly basis, prices in the Republic rose by 0.6 per cent, the first monthly increase this year.

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However, the latest index pointed to a significant fall-off in transactions with purchases down by more than 9 per cent in June to just over 4,000, one of the clearest signs yet that higher mortgage costs are pricing some potential buyers out of the market.

Central Bank data last week showed the average interest rate on new home loans rose above 4 per cent in June – the highest level in almost a decade. The increasing cost of mortgages here is expected to continue to dampen demand.

The CSO said households paid a median price of €318,000 for a home in the 12 months to June.

The Dublin region had the highest median price (€437,500). Within that, Dún Laoghaire-Rathdown had the highest median price (€630,000), while Fingal and South Dublin had the lowest (€410,000). The highest median prices outside Dublin were in the commuter counties of Wicklow (€423,749) and Kildare (€380,000), while the lowest price was €160,000 in Leitrim and Longford.

Rachel McGovern, director of financial services at Brokers Ireland, said the latest figures indicate said that the “heat has left the market”. However, she said there was no evidence “of any dramatic change upward or downward in prices; there are small changes.”

But, she said, being close to status quo is no good. The latest Eurostat figures show that 68 per cent of those aged between 25 and 29 in Ireland were still living at home last year, compared with an EU average of 42 per cent.

“It would be a terrible indictment of policymakers if we are going to see younger generations leave the country once again, this time not because of the state of the overall economy, which continues to thrive, but because they cannot gain independence in terms of home ownership,” she said.

Ian Lawlor of the Lotus Investment Group said: “As a lender to developers, we underwrite new loans assuming no further price growth – but we do not envisage a weakening of house prices.

“While we are experiencing a period of price stabilisation in the housing markets, we are still seeing average prices across the country continue to tick up. This is in spite of significant increases in mortgage rates over the course of the last year,” he said.