MyHome.ie Property Price Report: Buoyant labour market provides market boost after year of two halves

• Housing market has regained momentum, with national asking prices up 4.1% over the year and properties selling for 4% over asking prices in December
• A 50% rise in numbers earning in excess of €100,000, to 357,000 tax units, has provided a substantial market tailwind that has offset the impact of high interest rates
• Dublin annual asking prices up 4% through the year, while prices outside of Dublin are up 3.9%
• Final sold prices up 4% above the median asking price
• Stock for sale at lowest level since the pandemic

Asking prices for properties nationally rose by over 4% through 2023, fuelled by the marked low volume of properties for sale and a buoyant labour market, according to the latest quarterly house price report from MyHome.ie in association with Bank of Ireland.

The outcome for the full year was in marked contrast to the house price performance over the first six months when rising interest rates forced sellers to adjust valuations and reduce expectations for the prices they might receive.

Key findings:

The Q4 2023 report found that annual asking price inflation was 4.1% nationwide, 4% in Dublin and 3.9% in the market outside of Dublin.

Meanwhile, the report found asking prices rose marginally by 0.2% on the quarter in Dublin but fell by 0.4% nationally and by 1.2% outside the capital. This decline is of similar magnitude to that which occurred in the same quarter last year and reflects the quieter winter months.

This means the median asking price for new instructions nationally in Q4 was €325,000. In Dublin it was €415,000 and elsewhere around the country it was €280,000.

Other findings include:

• In December, houses were being sold for 4% over asking prices. At the start of the year that figure was just 1% and the shift is indicative of a more competitive market as demand outpaces supply. By contrast just 1.4% of properties listed on MyHome cut their price in Q4 – the lowest proportion of price cuts for the final quarter of the year since MyHome.ie began collecting data in 2011.
• The buoyancy of the labour market has had a significant impact on the market – Revenue estimates there has been a 50% rise since 2022 in number of tax units (single or jointly assessed couples) with incomes exceeding €100,000.
• The average mortgage approval in October was €297,000 – up 6.1% on the year meaning buyers are taking on greater mortgage debt despite higher ECB rates.
• There were just 11,600 properties for sale on MyHome at end 2023, down from 13,400 in Q3 – and well below the pre-pandemic figure of 20,000-plus. This equates to just 0.6% of the 2.1 million total homes in Ireland.
• There were 6,300 new listings on MyHome.ie in Q4 – down 19% on the year.
• There were 30,700 housing starts in the twelve months to October – well up from the 27,000 recorded through 2022.

Analysis:

The author of the report, Conall MacCoille, Chief Economist at Bank of Ireland, said: “If asking prices were under pressure at the start of the year as the market adapted to a new interest rate environment, the picture at year end was very different.

“Continuing supply issues meant that the market heated up again and by year end we saw once again that asking prices nationally were up over 4% over the year as a whole. Furthermore, we are seeing properties being sold for 4% over asking prices compared with 1% at the start of the year, indicating a more competitive market.

“Ireland’s buoyant labout market has meant that high interest rates have not had a negative impact on property prices. Indeed, Revenue estimates that there has been a 50% rise since 2022 in the number of tax units (single or jointly assessed couples) with incomes exceeding €100,000.

As for next year, our view is that the most likely outcome is another single digit rise in house prices over the course of the year. There will again be competing pressures on prices coming from elevated rates of interest on the one hand and continuing supply shortages on the other. If anything, the rise may be sharper given the supply issues and the possibility – despite mixed signals from policymakers – of interest rate reductions happening at some point during the year.”

Joanne Geary, Managing Director of MyHome.ie, said: “Supply shortage is now a very real issue. Pre-Covid, there were about 20,000 homes listed on MyHome.ie. At the end of Quarter 3, that was down to 13,400. But at the end of Q4 the number of listings was down again to just 11,400. That is close to the historically low levels we saw during the pandemic.

“We welcome the recent extensions and changes to the Help to Buy and First Home schemes, as well as the grant available for vacant, derelict homes and for those looking to retrofit. That being said, more needs to be done to unlock supply as it will be real crisis issue for the market as we look to 2024 and beyond.”