An increase in the supply of properties for sale has seen the growth rate of sought-after house prices fall to 6% in 2022, according to a report by property site Daft.ie.
This compares to asking price inflation of just over 8% in 2020 and 7.7% in 2021.
The report notes that the number of homes available for purchase on December 1 stood at just over 15,200, which was up by a third on the same date the year before.
However, it was significantly lower than the 2019 average of 24,200.
“Given that the pre-Covid19 market was effectively in balance, with a slight decline of 1.2% in 2019, the sales market in Ireland was not over the past 12 months a market of sufficient supply. to meet demand,” Ronan Lyons, professor of economics at Trinity College and author of the reports for Daft.ie, said.
“That’s what the leading indicator in this latest Daft.ie report tells us.”
Similar to their MyHome.ie counterparts, Daft.ie’s report saw asking prices decline by 0.4% in the last three months of the year.
This followed the late summer quarter where prices were effectively static.
The last time there were two consecutive quarters where prices did not rise – which happened in the second half of 2019 – this was interpreted as a sign of supply, both new and opportunity, reaching the levels necessary to meet market demand.
“Supply has recovered – slowly and steadily rather than quickly – with 64,000 homes coming up for sale in 2022, a similar level of supply to 2018,” Ronan Lyons noted.
“Any loss of supply, however, takes time to be replaced and although the flow of properties into the market has almost fully recovered, availability – at just over 15,000 homes as of December 1 – remains closer to the pandemic trough than pre-pandemic level,” he added.
He noted that housing demand had remained strong throughout 2022, but there was reason to believe that this year could see demand cool.
“On the one hand, interest rates have risen. A mortgage market provider started the year with fixed rates below 2%, but will enter the new year with rates for the same product almost double” , explained Mr. Lyons.
This, he said, impacts affordability and the maximum loan a provider will lend.
There are also broader economic conditions, with a slowdown expected across much of the global economy over the coming year.
“Such uncertainty makes people less confident about the future. We can see this in the expected rate of change in house prices. At 0.2% in December, this is the smallest increase expected since 2020. , when the lockdown meant people expected – at least initially – that prices would fall,” he added.
The economist also predicted that the first six months of 2023 will be “reasonably calm” in terms of price increases.
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He said it is clear from the report that market conditions have changed and the Dublin market is almost back to pre-Covid levels.
Speaking on Morning Ireland, he said changes were visible in the report’s regional figures as well as quarterly figures.
He said the mismatch between supply and demand had changed, with a mix of weakening demand and increasing supply.
“Supply has been much more affected than demand at Covid, and we’re just recovering from that in the market. Dublin is almost back to pre-Covid levels, but the rest of the country still has some way to go. do,” he explained.
Speaking of a housing referendum, he said he expected the Housing Commission to send something to the Housing Minister in the next six weeks.
He said the timing was up to a committee recommending the wording to the Commission. They will decide on this in the next four to six weeks, and then the file will be submitted to the Minister of Housing to be considered for a referendum.