Will Irish Property Price Fall in 2024?

The European Central Bank (ECB) has maintained a high interest rate for the past couple of months. The following figure shows the current rates effective since September, 2023, sourced from the centralbank.ie. Consequently, this has also kept mortgage rates elevated. Given this situation, will we witness a decline in prices in 2024? To explore this question, we will analyze various data points, including mortgage drawdowns and the availability of properties for sale on Daft.

Mortgage Approvals

The record-high mortgage rates indeed have some impacts on the number of mortgage drawdowns. The figure below shows the number of mortgage approvals from BPFI (Banking and Payment Federation Ireland). As evident from the figure, the number of mortgage approvals has been decreasing over the last couple of months. Therefore, fewer people are seeking mortgages to buy properties due to the high rates, which should exert downward pressure on property prices.

Property Price Trends

So... How about the property price in the last few months actually? 

The figure below is the Irish property price index from CSO (Central Statistics Office) up untill the last November. The price index is based on the price of 2015 as 100, and we can observe that the index has increased to almost 180 nationwide, around 155 for Dublin, and 200 for the rest of Ireland. The prices in the last few months have been increasing after slowing down a bit, as evident from the figure. Why is this happening? Let's delve into other data a bit more in the following...

Population

First of all, the population has been increasing in the past years and has now surpassed 5 million. This includes the last 2-3 years as well. Obviously, to accommodate this population growth, we need more housing in Ireland. Additionally, this increasing population will exert upward pressure on property prices if demand exceeds supply. How about our supply?

Supply is a big issue

If we examine the supply—the number of available properties to buy on Daft—we notice something concerning. 

The figure below illustrates the number of properties for each month over the last two years. Following the pandemic, there was an increase in the number of properties for sale from 2022, peaking at 20,000 nationwide. However, this trend did not continue last year, and we can observe a decrease in supply over the past year instead. Currently, the number of available properties is more or less similar to that of two years ago, despite the increasing population over this period. Therefore, we can see that there is a significant supply issue to meet the current demand, which is leading to upward pressure on property prices.

A similar trend can be noticed for the number of available properties in Dublin, with only around 2,500 properties available in the main city.

One good news here is that the number of available properties for rent in Ireland and Dublin appears to have been increasing. This might be a positive factor, as it provides more choices for renting over buying a property, especially if the available rental properties have reasonable rent prices.

One major change in mortgages this year is the increase in the amount to four times your income, which I personally believe will exert upward pressure on prices as well. 

To sum up, with an expected decrease in ECB's rates this year, and considering all these above-mentioned factors, it is hard to anticipate a price fall in 2024; instead, I personally expect a steady increase.