Irish House Price Report Q3 2023 | Daft.ie

Daft Reports

29th Sep 2023

As supply falters, demand seems resilient

Prices continue to rise ‐ albeit at a slower rate than has become common over the last decade. That is the key takeaway from this latest Daft Report. Having been largely static in the second half of 2022, and again in the first three months of this year, prices have risen since then.

Between June and September, prices rose by an average of 1.1% ‐ compared to an increase of 3.5% in the second quarter of the year. But, combined with that earlier increase, it means that prices are 3.7% higher than a year ago. Dublin bucks the trend somewhat ‐ a modest 0.1% fall quarter-on-quarter and just a 1.4% increase year-on-year ‐ but across all the main regions, this broad pattern of increases in the last six months offsetting falls in the previous nine ‐ holds.

Prices Have Increased By 1.1% In One Year

Given all that has happened in the macroeconomy over the last 18 months, a reasonable person might ask how ‐ how are prices rising again? Under the hood, the figures behind this latest report give some support to the idea that the dramatic increase in interest rates is gumming up supply in the second-hand housing market, more so than affecting demand.

Late in 2022, the total number of homes available to buy across the country was up one third on the same date a year ago. Granted, this was from a low base. Just over 17,000 homes were available to buy on October 1st last year, up from 13,000 year-on-year but well below the more than 26,000 available on the same date in 2019 ‐ before covid19 shook the market.

Covid19 ‐ with all its lockdowns that affected regular economic activity ‐ had led to a seizing up of the market in second-hand homes. By March 2022, there were just 10,000 homes for sale across the country. Over the following six months, there was a brief recovery ‐ culminating in that 17,000 figure from October last year.

But that turned out to be a peak. Since then, the number of homes available to buy at any point in time has slowly but steadily fallen. In the following year, it has fallen almost 30%, with just 12,200 homes available to buy in September 2023.

Is this down to a lack of supply coming on to the market or strong demand? For the same number of homes put on the market, the stronger demand is the fewer will be on the market in three months' time. But in some ways, these are flip sides of the same coin. Apart from first-time buyers ‐ obviously a key part of the market of course ‐ and executor sales, in the second-hand market most buyers are also sellers.

Nonetheless, we can look at the flow of homes onto the market to get a sense of the supply side of the equation. The 'target' ‐ to the extent that there is such a thing ‐ would probably be something like 70,000 listings over the course of a year, which is just above the total number of homes listed for sale during 2019, the year before covid.

Least And Most Expensive Counties In Ireland

In the twelve months between March 2020 and February 2021, there were fewer than 46,000 homes listed for sale. Over the following year, that flow improved bit by bit, to reach 56,000 in the year to early 2022. But over the last 18 months, the 12-month total number of homes listed for sale has largely been stuck at that level.

And in the last few months, it has started to dip. While in the year to February, there were 4% more homes listed for sale than in the preceding 12-month period (57,500 compared to 55,200), in the year to August, there were 4% fewer homes than in the equivalent period a year earlier: 54,100 compared to 56,500.

This pattern ‐ of the stock of homes for sale well below what it was a year ago and the flow of homes on to the market falling back, albeit far less dramatically ‐ is seen across all four principal regions covered in the report: Dublin, the rest of Leinster, Munster and Connacht-Ulster. The timing is similar in all regions too: both stock and flow measures of homes on to the sales market turn negative over the summer.

From this, we can say that supply is indeed weakening ‐ although not dramatically, at least not yet. In other words, the rise in prices seen in the last six months may be driven in part by a lack of supply ‐ but both prices and quantities suggest that, so far at least, demand is holding up reasonably well, despite everything.