House prices in the Republic are continuing to grow at double-digit rates as supply shortages, Government incentives to buy, and expectations of further interest rate cuts fuel demand.
The latest official figures indicate prices rose nationally at an annual rate of 10 per cent in the year to September, down marginally on the 10.1 per cent recorded in August.
Nonetheless it was still close to the highest rate of inflation seen in the Irish market in almost three years.
On a monthly basis, prices were up 0.9 per cent. In Dublin, the level of growth remained at 10.8 per cent year-on-year.
Demand is being driven by a combination of factors including a severe shortage of supply, help-to-buy schemes for first-time buyers and cheaper mortgage rates in anticipation of further interest rate reductions at European Central Bank level.
The figures from the latest residential property price index, compiled by the Central Statistics Office (CSO), suggest households paid a median or midpoint price of €346,000 for a home in the 12 months to September.
The Dublin region had the highest median price (€465,000) in the year to September. Within the Dublin region, Dún Laoghaire-Rathdown had the highest median price (€637,500), while Fingal had the lowest (€430,000).
In terms of activity in the market, the CSO noted that in September there were 4,167 dwelling purchases by households at market prices filed with Revenue, representing a 4.4 per cent month-on-month increase.
In the year to September, there were 48,559 home purchases by households of which 17,207 (35.4 per cent) were by first-time buyer owner-occupiers, while former owner-occupiers purchased 25,689 (52.9 per cent).
Property prices nationally have increased by 155.1 per cent from their trough in early 2013, the CSO said. Dublin residential property prices have rebounded by 154.5 per cent from their February 2012 low, while prices in the rest of Ireland are 164.5 per cent higher than the bottom, which was in May 2013.
Marian McQuillan, director of Quillsen estate agents, said property prices in Ireland have shown remarkable resilience to rising interest rates.
“Between July 2022 and September 2023, the European Central Bank (ECB) raised rates 10 times, increasing them from 0 per cent to 4.5 per cent. Despite these significant hikes, property prices continued to rise during this period, driven by strong pent-up demand,” she said.
“Since June 2024, we’ve entered a downward interest rate cycle, with expectations of further reductions in December. While it might seem logical that falling rates will fuel upward price pressures, the market’s insensitivity to rising rates raises questions about whether decreasing rates will have a direct impact on pricing dynamics,” she added.
- Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
- Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
