Ireland Property Prices See 3% Nationwide Increase in Quarterly 3

Property prices in Ireland have experienced a noticeable uptick, growing by 3% during the third quarter of 2024, as reported by DAFT.ie. This significant rise in home prices is a reflection of the growing demand, shrinking housing supply, and a tight real estate market. In this article, we’ll dive into the latest trends, factors driving the price surge, and what prospective homebuyers or investors should consider as they navigate Ireland's current housing market.

Overview of Ireland's Housing Market Q3 2024

During the third quarter of 2024, the average price for homes in Ireland was €344,848, reflecting a year-on-year increase of 6.2% compared to the same period in 2023. Additionally, home prices have surged by 37% since the start of the COVID-19 pandemic, driven by various economic and social factors that continue to affect housing demand.

Dublin: A Market on the Rise

Dublin led the pack with a 4.1% rise in housing prices from June to September, marking the largest three-month price increase in the capital since early 2017. This pushed home prices in Dublin to more than 6% higher than they were a year ago. Interestingly, Dublin's annual inflation rate has now outpaced the national average, making it the most dynamic market in the country for the first time since 2020.

The city’s booming housing market is driven by a combination of low supply and sustained demand, particularly for second-hand homes. During Q3, second-hand homes in Dublin sold for 7.6% above their listed prices, the highest recorded gap since 2010. This intense demand is largely the result of limited new housing stock and a shrinking inventory of available homes.

Price Changes Across Other Major Cities

While Dublin saw the sharpest rise, other major cities in Ireland also experienced notable increases:

• Cork City: Prices rose by 3.8%, bringing the average home price to €354,307.
• Galway City: Housing prices increased by 4.1%, with the average home priced at €388,604.
• Waterford City: Prices saw a similar growth trend, increasing by around 4%.
• Limerick City: Limerick stood out with the highest rate of price inflation, soaring by 9.7% year-on-year. The average home price in Limerick reached €292,437 in Q3 2024.

Shrinking Housing Supply: A Key Driver

One of the most significant factors influencing the rise in home prices is the shrinking supply of available homes, particularly in the second-hand market. As of September 1st, 2024, fewer than 11,900 second-hand homes were available for sale across Ireland, a 12% drop compared to the previous year. This marks the fifteenth consecutive month of supply declines, setting a new record low for this time of year.

The sharp decline in housing availability can be attributed to several factors:

1. Fewer Homes Entering the Market: Over the twelve months leading up to September, only 51,000 homes were listed for sale, compared to 57,000 in the same period the previous year.
2. COVID-19 Impact: The pandemic had a lasting impact on housing construction and home listings, leading to a shortage that continues to affect the market.
3. Tight Second-Hand Market: The second-hand housing market has remained especially tight, contributing to increased competition and pushing prices higher.

Market Outlook and Expert Insights

Ronan Lyons, an economist at Trinity College Dublin and the author of the DAFT.ie report, highlighted that while the construction and sale of new homes have been relatively stable despite rising interest rates, the same cannot be said for the second-hand housing market.

"The number of second-hand homes entering the market remains very low," said Lyons. "The scarcity of homes has driven prices up, particularly in Dublin, where there is strong demand for both new and second-hand homes."

Lyons also pointed out that although mortgage interest rates are starting to decline, it may not be enough to offset the underlying issue: a shortage of housing supply across the country. "While lower mortgage rates will help buyers, the focus for policymakers must remain on increasing the supply of homes, both new and second-hand, to meet demand."

Factors Contributing to Home Price Growth in Ireland

Several factors have driven the recent surge in home prices across Ireland:

1. Supply Constraints: As mentioned, the continued decline in housing stock, particularly in the second-hand market, has limited options for buyers and driven up prices.
2. Demand Outpacing Supply: The demand for housing, particularly in urban centers, remains strong, with buyers competing for a shrinking pool of available homes.
3. Economic Growth: Ireland's robust economic performance in recent years, combined with population growth, has led to increased demand for housing.
4. Mortgage Interest Rates: Although interest rates are beginning to ease, they remain a significant factor in affordability, especially as buyers adjust to the costs of borrowing in a high-interest environment.
5. Urbanization Trends: The concentration of job opportunities, amenities, and lifestyle benefits in major cities like Dublin, Cork, and Galway continues to drive demand for urban housing.

What This Means for Buyers and Sellers

For prospective buyers, the current market conditions can be challenging, especially in cities like Dublin and Limerick where prices are rising sharply. Buyers should be prepared to navigate a competitive market where homes often sell above their listed prices. Securing financing early and working with an experienced real estate agent can help streamline the buying process.

For sellers, these conditions present an opportunity to capitalize on the strong demand and limited supply. Homes, particularly second-hand properties, are likely to attract multiple offers and sell at a premium, especially in areas with strong demand like Dublin and Cork.

Policy Implications and Future Trends

The Irish government continues to focus on policies aimed at increasing housing supply, particularly through new construction projects. However, experts like Ronan Lyons suggest that addressing the issue of supply shortages in the second-hand market is crucial for achieving long-term market stability.

Looking ahead, the housing market is expected to remain competitive, with prices continuing to rise, albeit at a slower pace as supply and demand start to balance out. The ongoing recovery from the pandemic, coupled with declining mortgage rates, could ease some of the pressure on buyers. However, unless supply issues are addressed, the Irish housing market is likely to remain a seller's market for the foreseeable future.

Read more also: What Homebuyers Need to Know After Interest Rate Cut of Housing

Frequently Asked Questions (FAQs)

1. Why are home prices in Ireland increasing?

Home prices in Ireland are increasing due to a combination of factors, including a shortage of available homes, particularly in the second-hand market, strong demand for housing, and economic growth. Limited supply and high competition among buyers are driving prices up.

2. What is the current average home price in Ireland?

As of the third quarter of 2024, the average listed home price in Ireland is €344,848. Prices have risen by 6.2% compared to the same time last year.

3. Which cities in Ireland have seen the largest price increases?

Dublin saw the largest price increase in Q3 2024, with prices rising by 4.1%. Limerick, however, experienced the highest year-on-year inflation rate, with prices increasing by 9.7%.

4. Why is there a shortage of homes for sale in Ireland?

The shortage is primarily due to fewer homes entering the market, particularly in the second-hand housing sector. The COVID-19 pandemic also contributed to delays in construction and home listings, which has had a lasting impact on supply.

5. Will home prices continue to rise in Ireland?

While prices are expected to continue rising in the short term, the rate of increase may slow down as the market adjusts to supply and demand dynamics. Mortgage rates are also expected to decline, which could ease some of the pressure on buyers.

6. What should buyers consider in the current market?

In the current market, buyers should be prepared for competitive bidding and potentially paying above the listed price, particularly in high-demand areas like Dublin and Cork. Securing financing and working with a knowledgeable real estate agent can improve the chances of success in this market.