The property market is showing signs of stability, but asking prices were still up 2% in the second quarter of 2022.
That's according to Chief Economist at Davy, Conall MacCoille, who was speaking to Newstalk Breakfast after a new MyHome property price report revealed the housing market is showing slight improvements in stability.
The report found that annual asking price inflation is running at 2.2% nationally, with homes now being sold for 1.4% over the asking price versus 5-6% this time last year.
Demand remains particularly strong, with the value of mortgage approvals reaching record levels and average time to sale agreed close hitting historic lows.
Mr MacCoille said some degree of price falls were likely, which the report highlighted in the earlier months of 2022.
"We saw asking prices fall for the previous three quarters, but in the second quarter of the year, it actually picked up and prices are still up 2% in the year," he said.
"In other countries, people are expecting maybe double-digit price falls, such as in the United Kingdom.
"What we're seeing here in Ireland is a bit more stability and that's not too surprising."
'Tight market'
Mr MacCoille said the stability could be linked to higher numbers of people borrowing.
"The Central Bank loosened the mortgage lending rules last year, so people are borrowing more," he said.
However, the low availability of properties has meant the market is still "exceptionally tight", according to Mr MacCoille.
"There are only 14,000 properties listed for sale on MyHome at the moment, and that's down from 20,000 pre-pandemic.
"In terms of mortgage approvals, [they are] up 4% this year, so certainly has been a bit of correction [with] prices strengthening in the second quarter.
"Ultimately the market is still very tight so it's not too surprising to see it stabilising despite the overvaluation that built up last year."
AJ7G4T New holiday village housing Kenmare Ring of Kerry County Kerry IrelandHomebuyers
Mr MacCoille said the report is still not entirely positive for potential homebuyers, as prices have not dropped as some may have expected.
"That could still happen in Dublin potentially, but ultimately, prices are stretched and stabilising," he said.
"Having said that, wages are going up, so, there is still an improvement in affordability – albeit very slight."
While it was expected that homebuilding figures would reduce to 25,000 units per annum, Mr MacCoille said homebuyers can expect a slightly better supply.
"It looks like we'll be closer to 30,000 units this year. But overall, this is still an extremely tight market – it's very difficult for buyers," he said.
"We're seeing prices still up 2% in the year despite the interest rates going up."
Asking prices
Mr MacCoille said houses are now being sold for prices that are closer to the original asking price.
"We can look at how people are paying above or below the asking price – the summer of last year people were paying five to 6% above – showing just how fraught the market was at that point," he said.
"When we look at the market at the moment, people are paying close to 1.5% above the asking price.
"If you look at the UK at the moment, they've calculated that people are, on average, paying 4% below the average asking price."
Lower Baggot Street, Dublin City, IrelandMr MacCoille said the report found that supply is still a major issue for the market.
"We saw a little bit of improvement in housing starts in the first few months of the year, but that looks to be largely apartments in Dublin and, of course, they're almost certainly targeted at the rental market," he said.
"We're not seeing as much progress as we really should be seeing.
"We are expecting around 30,000 completion this year, really that number should be 40,000 or 50,000 to start making inroads into the pent-up demand."
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