Irish House Prices in 2023 - A Mixed Bag

Summary: Irish house prices have shown varied trends in early 2023. While prices dipped in Dublin, they slightly rose elsewhere in the country. Various factors will influence the housing market this year, with some pushing prices up and others pulling them down.

Key Points:

1. Recent Price Trends

   • House asking prices dropped by 0.3% in the first quarter of 2023.
   • In Dublin, the fall was more significant at 0.8%, while other parts of Ireland saw a minor increase of 0.2%.
   • This decline suggests that the high prices from the pandemic era might be stabilising.

2. Dublin’s Housing Market

   • Dublin’s house prices have dropped by 2.1% since their highest point in September.
   • In January, the average house price in Dublin was €541,000, which is quite high relative to average incomes.

3. Positive Indicators:

   • Despite the declines, the Irish housing market is stable. It’s not expected to see significant drops like in the UK or US.
   • Factors supporting this stability include:
     • Strong demand due to the Irish economy’s solid performance.
     • Limited housing supply.
     • The European Central Bank (ECB) is not likely to hike interest rates as much as other central banks.
     • The Central Bank of Ireland (CBI) recently relaxed its mortgage lending rules, which could push house prices up.

4. Market Statistics:

   • Currently, 13,600 properties are listed on MyHome, which is lower than the 20,000 listings before the pandemic.
   • Houses are selling fairly quickly, with an average time of three to four months from listing to sale.
   • The housing demand in Ireland is stronger compared to many other countries.

5. Regulatory Changes:

   • The CBI’s decision to ease regulations for first-time buyers is making a difference.
   • The average mortgage approval for first-time buyers went up by 2.3% in February, reaching a new high of €281,350.
   • It’s expected that this rule change could increase house prices by 8% in the long run.

6. Interest Rates:

   • Most fixed-rate mortgages in Ireland hover around 4%.
   • There are predictions that the ECB might increase its deposit rate to 3.25%, which could influence house prices.

7. Outlook for 2023:

   • The forecast for house price growth in 2023 has been reduced to 1.5%, down from the earlier prediction of 4%.
   • This might translate to price reductions in Dublin, but slight increases in other parts of Ireland.
   • Factors like a strong economy and relaxed mortgage rules by the CBI are expected to support the housing market throughout the year.

Conclusion:

While there’s some uncertainty in the Irish housing market for 2023, several positive factors could lead to sustained or increased prices as the year progresses