House prices in the Republic are continuing to grow at double-digit rates as supply shortages, Government incentives to buy, and expectations of further interest rate cuts fuel demand.
The latest official figures indicate prices rose nationally at an annual rate of 10 per cent in the year to September, down marginally on the 10.1 per cent recorded in August.
Nonetheless it was still close to the highest rate of inflation seen in the Irish market in almost three years.
On a monthly basis, prices were up 0.9 per cent. In Dublin, the level of growth remained at 10.8 per cent year-on-year.
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Demand is being driven by a combination of factors including a severe shortage of supply, help-to-buy schemes for first-time buyers and cheaper mortgage rates in anticipation of further interest rate reductions at European Central Bank level.
The figures from the latest residential property price index, compiled by the Central Statistics Office (CSO), suggest households paid a median or midpoint price of €346,000 for a home in the 12 months to September.
The Dublin region had the highest median price (€465,000) in the year to September. Within the Dublin region, Dún Laoghaire-Rathdown had the highest median price (€637,500), while Fingal had the lowest (€430,000).
In terms of activity in the market, the CSO noted that in September there were 4,167 dwelling purchases by households at market prices filed with Revenue, representing a 4.4 per cent month-on-month increase.
In the year to September, there were 48,559 home purchases by households of which 17,207 (35.4 per cent) were by first-time buyer owner-occupiers, while former owner-occupiers purchased 25,689 (52.9 per cent).
Property prices nationally have increased by 155.1 per cent from their trough in early 2013, the CSO said. Dublin residential property prices have rebounded by 154.5 per cent from their February 2012 low, while prices in the rest of Ireland are 164.5 per cent higher than the bottom, which was in May 2013.
“There continues to be contrasting trends in transactions in the new and second-hand homes markets,” Goodbody economist Dermot O’Leary said.
He noted that the figures showed that while new home transactions grew by 12 per cent in the third quarter and were up 4 per cent in the year to date, existing home transactions fell by 7 per cent in the third quarter and were down by 5 per cent in the year to date.
O’Leary highlighted that purchases of new homes by first-time buyers grew by 33 per cent year on year in the third quarter due to ongoing growth in the population, employment and significant supports for the sector such as Help-to-Buy and the First Home scheme.
“The two main parties in government have pledged continued supports if re-elected to government following next week’s general election,” he said.
Marian McQuillan, director of Quillsen estate agents, said property prices in Ireland have shown remarkable resilience to rising interest rates.
“Between July 2022 and September 2023, the European Central Bank (ECB) raised rates 10 times, increasing them from 0 per cent to 4.5 per cent. Despite these significant hikes, property prices continued to rise during this period, driven by strong pent-up demand,” she said.
“Since June 2024, we’ve entered a downward interest rate cycle, with expectations of further reductions in December. While it might seem logical that falling rates will fuel upward price pressures, the market’s insensitivity to rising rates raises questions about whether decreasing rates will have a direct impact on pricing dynamics,” she added.
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