House prices 8% up on Celtic Tiger peak
Latest figures ‘grim’ for those hoping to buy a home
HOUSE prices have soared to nearly 8% above Celtic Tiger peaks, new figures show.
However, Dublin prices are still 3.8% below their peak in February 2007.
Residential property prices in the rest of the Republic are 8.6% higher than their peak in May 2007.
In Dublin, the average house price is now almost €560,000, up from just below €542,500 a year ago, according to the Central Statistics Office.
The strong rise in prices is despite the European Central Bank upping interest rates ten times since July 2022, from 0% to 4.5% now. Rising interest rates increase mortgage costs and are expected to cool demand as loan repayments are higher.
The seemingly unstoppable property price increases ‘paints a grim picture for those hoping to buy a home of their own’, said Social Democrats’ housing spokesman Cian O’Callaghan.
‘It is more expensive now to buy a house than it was at the peak of the property boom in 2007. The Government’s failure to get to grips with this crisis is turning homeownership into a pipedream for many,’ he remarked.
The region with the fastest growing property prices is the Midlands, which is up 7.8%. The average price in the Midlands – which covers Longford, Westmeath, Offaly and Laois – is just below €283,000. The least expensive place in the State is Clones, Co. Monaghan, where the median price is €137,500. Association of Irish Mortgage Advisors (AIMA) chairman Trevor Grant said: ‘The acceleration in the rate of regional house-price growth is becoming more and more of an issue for first-time buyers because areas which previously were affordable for them are now less so. ‘First-time buyers need to be ahead of the game if they want to get their foot onto the property ladder this year which includes having the necessary deposit waiting in the wings and ensuring all of their ducks are in a row when it comes to a mortgage.
‘The scarcity of housing supply, coupled with the huge demand for housing, will continue to drive house prices up this year. It’s imperative that more supply comes on board.’
Ian Lawlor, head of property financiers Lotus Investment Group, said: ‘The uptick in property prices has an upside for existing mortgage holders as they may be eligible for a cheaper mortgage as a result of a lower loan-to-value (LTV) ratio on their mortgage.
‘These borrowers should explore whether they can get a better mortgage deal by switching lender or indeed a cheaper loan with their existing lender. A good mortgage broker will be able to point them in the right direction here.
‘The apparent peaking of ECB rates – and the expectation that the ECB may commence a round of interest-rate reductions this year – possibly by late spring, is a positive for existing borrowers and prospective buyers. While ECB rates are expected to fall, when and by how much is very much up for debate. When the reductions do start, they are likely to be very gradual and deliberate.’
Institute of Professional Auctioneers and Valuers (IPAV) chief Pat Davitt said ‘it still looks like we’re some way off ramping up supply to anywhere near the levels needed’.
‘The perennial problems with planning and the cost of building finance seem as stubborn as ever. And on the latter we could see things get worse before they get better, given the hike in ECB interest rates,’ he said. He also claimed much of the political debate around housing is still focusing on ‘stick rather than carrot’.
‘Continuing to demonise and over-regulate landlords is dealing with the symptom of the problem, not the issue itself, and it will ensure the continuing flight from the market of landlords.
‘We have to tackle the real impediments to the building of homes, which largely rests in the areas of planning and investment finance,’ he said.
He said most activity in the housing market involves those on higher-than-average incomes and those who are not dependent upon or at least not fully dependent upon mortgage finance.
‘That needs to change if we are to maintain social cohesion,’ he warned. There was a slight dip in sales in December, with 5,063 homes sold which is a 2.9% decrease compared with the 5,213 purchases in December 2022.