Rising interest rates are to blame for the slight fall in house prices, a think tank has concluded. 

Daft.ie estimates property prices have dropped by 0.5% nationwide in the space of a year - the first time they have fallen since 2020 when Ireland was in lockdown. 

Earlier this month, the ECB raised interest rates to a 22 year-high of 3.5% - a decision Social Justice Ireland Research And Policy Analyst Susanne Rogers said has had a huge impact on the property market across Europe.  

“House prices are falling, not just in Ireland,” she told The Hard Shoulder. 

“A lot of that will be linked to increasing mortgage interest rates. 

“So, the more difficult it is to enter into the market, that will have a knock on effect on the amount of people who are looking to buy.” 

The average home in Ireland now costs €309,648 - a price similar to where they were during the peak of the Celtic Tiger. 

Global trend

Former Housing Agency Chair Conor Skehan said the news is good for those who think housing is “unaffordable” but could negatively impact the construction sector. 

“When house prices fall, builders retreat and they stop building,” he said. 

Mr Skehan also said the price dip could be the beginning of a sustained downward trend. 

“House prices are falling all over the world,” he said. 

“The one thing none of us want to talk about is that everything to do with housing in Ireland is the same to do with everything else. 

“Reuters had a report out recently talking about how house prices are going to fall all over the world from anything from 5-10% in the next 12 months.”

Rent

Earlier this year, a Daft.ie survey found rent in Ireland had increased by 14% in the space of year and Mr Skehan said falling house prices would not necessarily mean cheaper rent. 

“The rental and the housing issues, if you want to call it that, are quite separate things,” he said. 

“So, the house price increases have to do with global forces… The rental issue is being caused by the financialisation of housing - where housing has become an investment asset.” 

Construction cranes on a building site in Dublin, 10-10-2017. Image: Eamonn Farrell/RollingNews

Mr Skehan said there has been a “huge exit” of landlords from the rental market and that has made renting in Ireland so expensive. 

“More and more people don’t want to be landlords,” he said. 

“Especially small landlords - and that’s drying up the supply.”

Main image: A village in County Donegal. Picture by: Alamy.com