LATEST CSO HOUSE PRICE DATA
The residential property market continues to soften, but there would appear to be limited downside
We are approaching the first anniversary of the ECB’s first interest rate increase on 27th July last year. Since that auspicious date, the ECB has delivered a relatively dramatic increase of 4 per cent in rates. Such a significant increase in borrowing costs in such a relatively short period of time was bound to have significant impacts, and these are starting to feed through, particularly in the housing market. Given the increase in rates delivered over the past year, it was inevitable that at this stage these higher borrowing costs would combine with the elevated levels that house prices had reached in 2022 to deliver a softer market. This is exactly what is now happening, with ongoing signs of a deceleration in residential property prices.
The latest residential property price data from the CSO show that in the year to May, national average residential property prices increased by 2.4 per cent, with prices in Dublin declining by 0.2 per cent and prices outside of Dublin rising by 4.5 per cent.
These annual growth rates are down from a peak growth rate of 15.1 per cent in national average prices in March 2022; a peak growth rate of 13.2 per cent in Dublin in February 2022; and a peak growth rate of 17.1 per cent in the Rest of Ireland in March 2022.
Between December 2022 and May 2023 national average residential property prices have fallen by 1.9 per cent; prices have fallen by 0.5 per cent outside of Dublin; and Dublin residential property prices have declined by 4.2 per cent between September 2022 and May 2023.
In May 2023, the national Residential Property Price Index (RPPI) showed that national average residential property prices were 1.3 per cent above the highest level recorded at the peak of the economic boom in April 2007. Dublin residential property prices are 9.6 per cent lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 2.2 per cent higher than their May 2007 peak.
This softening of the market is good news for prospective purchasers and with the ECB likely to increase rates by at least another 0.5 per cent, further softening of the market looks likely. Having said that, the reality is that demand still exceeds supply and barring some sort of serious economic/employment shock (which doesn’t appear likely for the moment at least), persistent demand pressures are likely to prevent the market from correcting too much.