Figures from property website Daft.ie show that asking prices for homes fell by 0.3% during the first three months of 2023.

This was the first time since 2013 that prices had fallen at this time of the year, and the largest first-quarter fall since 2012.

The report shows that average prices are now 2.9% ahead of the same quarter last year – the first time since the middle of 2020 that annual inflation has been below 6%.

Supply shortfall

Asking prices have now fallen for three quarters in a row.

The average asking price in the first quarter of this year was €308,497.

In a commentary accompanying the report, Ronan Lyons (Associate Professor in Economics at Trinity College Dublin), said that, on the face of it, with demand weakening, prices should fall this year.

He pointed, however, to the continuing supply shortfall in the market.

“The stock of homes available to buy is indeed higher than it was a year ago – 13,000 compared to 10,000 – but that is still barely half the level of supply that prevailed before COVID-19,” the conomist stated.

Completions set to fall

“Between 2015 and 2019, when the market was tight in most parts of the country, there was an average of 25,000 homes to buy at any point in time,” he added.

Lyons said that the supply of new homes responded to costs, which had risen, and the general expectation was that completions of new homes this year would be well below the 30,000 new homes finished last year.

“And if prices continue to fall, that is likely to impact second-hand supply. Ultimately, even in a cyclical downturn, it is hard to escape the overall lack of housing that has emerged in Ireland since the early 1990s,” the economist stated.