Asking prices for homes increased by 6 per cent nationally last year despite evidence of a slowdown in the second half of 2022 following “an unprecedented couple of years” of high demand and low supply, a new report by Daft.ie indicates.
In its final quarterly housing report of 2022, the property website’s analysis suggests that the rate of asking price inflation moderated from as much 3.6 per cent between April and June last year to a decline of 0.4 per cent in the months between October and December. Prices were effectively flat between July and September.
Asking prices increased nationally by 6 per cent last year, compared to 8.1 per cent in 2021 and 7.7 per cent in 2020 when prices rose steadily over eight consecutive quarters.
The persistence of house price inflation indicates that the market over the past 12 months had failed to match supply with high levels of demand for homes, said Ronan Lyons, associate professor of economics at Trinity College Dublin, who compiled the report.
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Yet the declines observed in the second half of 2022 may continue into 2023, he said, if demand for homes continues to falter amid rising interest rates.
“There are reasons to think that demand has started to cool off, following an unprecedented couple of years,” Mr Lyons said in his commentary on the report.
“Interest rates have risen. One mortgage market provider started the year with fixed rates below 2 per cent but will enter the new year with rates for the same product of almost double that. This mathematically filters through to affordability and the maximum loan a provider will lend.”
If this is combined with improvements in the supply of housing – which continues to recover from the impact of the pandemic when construction sites were shut down for long periods – this “may bring the closest to a sales market in balance that Ireland has seen for some time”, Mr Lyons said.
[ House prices fall slightly in Dublin cityOpens in new window ]
Overall, Mr Lyons said that demand had remained strong in 2022. Although the supply of homes had improved, the availability of new homes remained low at the start of last month.
The Daft report largely matches asking price data published by MyHome.ie on Tuesday, which also showed a slowdown in asking prices in the final three months of the year, the second consecutive quarter of decline. MyHome is owned by the company that publishes The Irish Times.
Just 15,000 homes were listed for sale on December 1st, 2022, the report indicates. Mr Lyons said that this remains “closer to the pandemic low than the pre-pandemic level” despite the fact that 64,000 homes were up for sale throughout 2022, a level of supply similar to 2018.
Separately, the report indicates that the house asking price inflation gap between Dublin and the rest of the country was beginning to close.
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Over recent years, asking prices had been rising outside of the capital at a faster rate than in Dublin due to a host of factors including the rise of remote working and soaring prices in the capital forcing house-hunters to look further afield.
Prices in Dublin rose 5 per cent last year, the Daft figures indicate, compared with 6.9 per cent in the rest of country. This compares with a gap of 7.8 percentage points in 2021.
South county Dublin recorded the highest average asking price nationally in the fourth quarter of 2022 at €646,976, followed by South Dublin City at €465,401. Leitrim had the cheapest average asking price over the period at €173,215 followed by Longford at €184,985.
