The author of MyHome.ie’s latest report on the housing market has said that inflation and interest-rate rises are likely to cool “sky-rocketing” demand in the second half of 2022.
Davy chief economist Conall Mac Coille was commenting after MyHome.ie figures showed that asking prices for homes rose at an annual rate of 10.9% during the second quarter of the year.
This represents a slowdown from growth of 12.3% in the first quarter. The annual increase in the latest three-month period in Dublin was 7.9%, but prices rose by 12.7% outside the capital.
Asking price inflation was 5.3% nationally in the second quarter alone – 3.4% in Dublin, and 6.1% elsewhere around the country.
‘Encouraging’ supply signs
MyHome.ie says, however, that a substantial rise in the quarterly rate is “not unusual” ahead of the busy summer trading season.
The median asking price for new homes nationally is now €320,000. The price in Dublin is €403,000, with a figure of €270,000 for the rest of the country.
The report shows signs that sellers are returning to the market, with the number of available properties for sale on MyHome.ie rising to 12,700 in June 2022 – up from 11,200 in March.
It also states that more than 5,000 housing units were completed in the first quarter of this year, which is normally the weakest quarter for construction.
Joanne Geary (managing director of MyHome.ie) described these figures as “encouraging”, but pointed out that demand was still “far outstripping” supply.
Celtic Tiger repeat ‘unlikely’
Mac Coille said that 2022 should be “a year of two halves”, with price inflation slowing down in the second half of the year. He did not rule out a “modest fall” in home prices.
“Double-digit inflation and sharp price gains are set to give way to greater concerns on affordability, the economic outlook, and the impact of the ECB raising interest rates,” the economist said.
He added that, even though the slowdown had been marginal in this quarter, anecdotal evidence from estate agents suggested that the momentum driving asking-price inflation earlier in the year was starting to slow.
The economist believes, however, that there is unlikely to be a repeat of the Celtic Tiger era, as the Central Bank’s mortgage-lending rules have kept the market in check.
Mac Coille stated that demand was still “exceptionally intense”, with the average time to sale agreed falling to a fresh record low of 2.6 months.