Irish house price inflation jumped closer to 9 per cent in June amid a shortage of second-hand properties for sale and tight supply across the market.
The latest residential property price index, compiled by the Central Statistics Office (CSO), indicates that house prices increased by 8.6 per cent in the 12 months to the end of June, up from a rate of 8.2 per cent in May.
The figures reveal property prices in Dublin rose at an even higher rate than the national average, up 9.3 per cent in June from 8.2 per cent in May.
House prices outside Dublin, meanwhile, surged by 8.2 per cent over 12 months.
“Average house prices are now 10.8 per cent higher than at the height of the previous property boom in April 2007,” the CSO said.
Against this backdrop and with interest rates – and thus, borrowing costs – still elevated, the CSO said the number of homes changing hands has continued to decline this year.
About 3,563 dwelling purchases – including houses and apartments – at market prices were filed with the Revenue Commissioners in June, down by 11.5 per cent when compared with the 4,025 purchases in June, 2023, the figures show.
Nationally, the median price of a dwelling – including houses and apartments – was €337,500 over the 12-month period to June, the CSO said, up from €335,000 in May.
In Dublin, meanwhile, house prices were up 10 per cent annually in June from last year while apartment prices jumped 6.6 per cent. Outside the capital, house prices had increased 8 per cent with apartment prices ahead of June, 2023 by 10 per cent, the CSO said.
Market analysts have identified a steep decline in the number of second-hand properties coming to market this year as one of the main drivers of the current spike in house price inflation as home buyers compete for a dwindling number of properties.
In a sign that the shortage of homes for sale may be worsening, estate agent Sherry FitzGerald said last month the volume of sales fell 10 per cent in the first three months of 2024 compared to a year ago. There were 27 per cent fewer second-hand homes for sale in January this year than 12 months earlier, it added.
But Trevor Grant, chairman of Irish Mortgage Advisors, said the well-established mismatch between the supply of new homes and demand among first-time buyers also remains an issue across the market. Despite increases in housing commencements this year, the Government’s house building targets are “way below” the level economists have identified would be required to keep up with demands placed on the market by the growing population.
“This is the tenth consecutive month that annual house prices have increased and means that many prospective first-time buyers will continue to see their chances of buying a home slip away from them,” he said. “The shortage of new homes available to private buyers means many first-time buyers are bidding against trader-uppers/movers, which in turn is driving up second-hand prices.”
House price inflation is being fuelled by the overall mismatch between supply and demand, Mr Grant said, and could be given a further boost if the European Central Bank (ECB) cuts rates again this year, making home borrowing costs cheaper for buyers.
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