House price inflation moderates
Sherry Fitzgerald market report
Sherry FitzGerald, Ireland's largest estate agent, has announced that the average value of secondhand homes in Ireland recorded a 1.3% increase in the second quarter of 2023. This growth contributes to a rise of 2.1% in the first half of 2023, and 3.4% over the past 12 months.
Average values in Dublin grew by 0.7% in the quarter, bringing growth to 1.5% in the first six months and 2.4% in the twelve months.
In line with recent trends, the rate of price inflation outside of Dublin exceeded that of the capital. Average values outside of Dublin grew by 2.0% in the quarter, resulting in a cumulative price growth of 3.0% in the first half of 2023 and 4.6% annual price growth.
Nationally, the Mid-West and West regions recorded the strongest price growth, with annual growth rates of 9.6% and 7.0% respectively.
Commenting on the latest analysis, Marian Finnegan, Managing Director, Sherry FitzGerald said: “The evidence available continues to suggest a return to more normalised levels of growth in the residential property market. The increase in average values of secondhand homes by 3.4% in the year, indicates that the market is stabilising after a period of strong inflation. Furthermore, this is particularly notable in the Dublin market, which recorded growth of 2.4% in the past twelve months.”
A review of transaction activity in the first quarter of 2023 revealed that sales volumes continue to surpass pre-pandemic levels. Excluding block sales and new homes acquired for social housing, approximately 12,500 housing transactions were recorded in the first quarter of 2023, as per the Property Price Register (PPR). This represents a 2.0% increase compared to the same quarter in 2022 and an 11.3% increase compared to the opening quarter of 2020, just prior to the pandemic. In the second-hand market, activity remained steady, with approximately 11,600 units sold, in line with 2022 figures. Dublin and the regional centres exhibited robust second-hand activity, with Dublin experiencing a 16.9% increase in transactions compared to the first quarter of 2022. Cork, Limerick, and Galway also reported increases of 10.6%, 5.7%, and 3.5% respectively.
Furthermore, the exodus of landlords from the market has continued throughout 2023.
In the first six months of the year, only 12% of purchasers of secondhand homes through Sherry FitzGerald were investors, while 35% of vendors were investors selling their properties.
This data would suggest a net loss of just approximately 6,000 tenancies from the rental market in the first six months of 2023. It highlights the urgent need for targeted measures from the government in Budget 2024 to address the ongoing emergency in the rental market.
Marian Finnegan, Managing Director, Sherry FitzGerald, concluded: “The analysis of the first six months reveals a return to a more normal level of price inflation in the residential market. This comes after two years of heightened inflation in the post- Covid period.
“However, the underlying challenges in the residential market remain, including the risk surrounding output in the new homes sector and a further net loss of 15,000 units from the private rental market. Therefore, urgent policy changes are needed to address both the immediate and long-term challenges in the lettings market in order to stabilise the emergency in the rental sector.”