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.

Irish property tredns - January 2023

 From CSO (Central Statistics Office) data till December 2022

• The national Residential Property Price Index (RPPI) increased by 7.8% in the 12 months to December 2022, with prices in Dublin are rising by 6% and prices outside Dublin up by 9.3%.

• In December 2022, 5,213 dwelling purchases by households at market prices were filed with the Revenue Commissioners, an increase of 0.8% compared with the 5,170 purchases in December 2021.

• The median price of a dwelling purchased in the 12 months to December 2022 was €305,000.

• The lowest median price for a house in the 12 months to December 2022 was €152,000 in Longford, while the highest median price was €625,000 in Dún Laoghaire-Rathdown.

  
  

  
   
•  The overall trends of residential property price keep increasing,  although the increase rate has been slowing down a little from the previous figure.

 

From Property Price Register data till January 2023

• 2945 sold properties have been registered for 2023-1
• This is -55.09% change from last month
• This is -18.76% change from the same month of last year

 

• The mean price of sold properties is 345306.9 EURO for 2023-1
• This is -17.74% change from last month
• This is 2.96% change from the same month of last year

 

• The median price of sold properties is 295000.0 EURO for 2023-1
• This is -1.52% change from last month
• This is 6.88% change from the same month of last year

 

 The top-5 most expensive sold properties are 

• 8 MARLBOROUGH RD, GLENAGEARY, DUBLIN (6500000 EURO)
• GRENAGH, AVOCA AVE, BLACKROCK (5200000 EURO)
• 12-24 PARK GREEN, COULTER PLACE, DUNDALK (4149289 EURO)
• HILLSIDE, THE HILL, MALAHIDE (3665500 EURO)
• 59 MERRION RD, BALLSBRIDGE, DUBLIN 4 (3600000 EURO)

 

From the number of properties available on Daft.ie  we can have an idea about how many properties are available on the market at the moment.

• The number of properties available for purchase now (~17000) is larger than that one of April last year.
• It is likely to have more properties from April this year and hopefully towards the level before pandemic.
  

 

 

 

ECB Interest rate 

• The ECB interest rate has been increased during the last year several times, and is record high. And it is likely to be increased again, which might hinder the increase of property prices
  

From the number of mortgage approvals till December 2022 (data from BPFI)

• A total of 3,635 mortgages were approved in December 2022 – some 1,789 were for FTBs (49.2%) of total volume) while mover purchasers accounted for 798 (22.0%).
• The number of mortgages approved in December fell by 33.1% month-on-month and by 5.7% year-on-year.
• Mortgages approved in December 2022 were valued at €996 million – of which FTBs accounted for €485 million (48.7%) and €255 million by mover purchasers (25.6%).
• The value of mortgage approvals fell by 33.5% month-on-month and 1.5% year-on-year.
• Year-on-year approval volumes rose by 9.3% to 58,276 while values rose by 17.9% to €15.9 billion.

Population trends

• Population in Ireland has been increased a lot, and now it is over 5 million. This causes the shortage of residential properties and the increase of the property price.
  

Find more about previous trends: https://parklize.blogspot.com/p/ireland-housing-sale-trends.html