Increasing housing supply in Ireland has moderated price rises, with figures indicating that annual housing price inflation has been declining since its peak at over 15% in March 2022.
However, affordability challenges remain with property prices nationally more than doubling from their low in early 2013.
This is according to the latest Housing Market Monitor for the First Quarter 2023, published today by Banking & Payments Federation Ireland (BPFI).
Better Affordability
There were 6,716 new completions in the first quarter of 2023, a 19.1% increase from the first quarter of 2022, and the most completions seen in any first quarter since the data series started in 2011.
The BPFI suggest this increased supply should provide better affordability for potential home buyers as average prices start to moderate but as of April 2023 average national prices were 1.7% higher than their highest level observed in 2007 and property prices nationally have increased by over 127% from their low in early 2013.
As housing prices have risen so too have borrower incomes. BPFI mortgage data shows for example, that the percentage of solo first-time buyer (FTB) applicants buying or building a new home remained stable between 2019-2022, notwithstanding the fact that average property prices increased by almost 26% in the same period.
The federation believes this is mainly due to increases in the average incomes of borrowers, from €59,000 in 2019 to €67,000 in 2022 for solo FTB applicants. Similarly, increases in average prices over the period contributed to higher loan values.
Regional Differences
The data shows regional differences remain with average prices in Dublin 9.1% lower than the peak in 2007 but 2.5% higher in the rest of Ireland. The BPFI said rural locations are relying more on self-build units over housing schemes and apartment developments.
While FTB self-build mortgages accounted for around 3% of FTB mortgage drawdowns on new properties in Dublin in 2022, in the South and Mid-West, nearly 74% of FTB drawdowns on new properties were for self builds.
Outlook
“Overall, the increase in supply of housing is beginning to ease the growth in property prices," said Chief Economist of BPFI, Ali Ugur.
"At the same time, existing and further cost pressures such as increased building and labour costs, as well as the changing interest rate environment, could affect the viability of some of the housing projects currently planned, particularly in the institutional investor market, which could affect output in 2024 and beyond.”
Source: www.businessworld.ie
