The “continued market imbalance between supply and demand” will fuel further house price growth this year but the uplift in cities such as Dublin where affordability already stretched will be moderate, in the low single digits, estate agent DNG has predicted.
While new housing output continues to increase, the company said the overall stock of accommodation available to purchase in the new and second-hand markets will remain below the level required to meet demand.
DNG is the latest industry player to forecast further house price growth in 2024 despite the squeeze from cost-of-living pressures and higher borrowing costs. Daft.ie and Sherry FitzGerald have also predicted another positive year for house prices.
Based on a selected basket of bellwether properties, DNG estimated the average price of a second-hand home nationally rose by 4.3 per cent last year, down from a rate of price growth of 7.6 per cent the previous year. In Dublin, second-hand house prices increased by 3.3 per cent last year, up from 3.1 per cent in 2022, with the company noting the market in the capital had a stronger-than-expected second half of the year.
DNG said the average price of a resale property in Dublin now stands at €531,773 compared to €514,998 at the end of 2022. However, residential property prices in the capital remain 25 per cent below their previous peak in 2006.
At a national level, and excluding Dublin, the average price of a second-hand home, according to the company’s internal price gauge, stood at €264,772.
In terms of the year ahead, it forecasts further moderate growth in prices both in Dublin and nationally, with regional price gains again set to outstrip those in the capital “where nominal values are already elevated, and affordability is more challenged”.
An analysis of buyers revealed first-time buyers were the “dominant actors” in the second-hand market in the capital, accounting for more than half of second-hand home purchases last year. More than two-thirds relied on mortgage finance to fund their purchase while 21 per cent had cash/non-mortgage finance for their purchase.
While the supply of new homes is set to reach 32,000 units in 2023, this was still well below the estimated 35,000 new units required each year to meet demand, it noted.
The year “2023 was not without its challenges, however, the continued accommodation crisis and the shortage of homes available to purchase meant that prices rose marginally last year,” said DNG’s director of research Paul Murgatroyd.
“Looking ahead, positive demographic trends, the prospect of falling interest rates and a solid economic backdrop all point towards another year of low but positive price inflation in the residential market,” he said.
DNG chief executive Keith Lowe said: “Stronger than anticipated price growth in the latter part of last year meant that the annual rate of house price inflation remained in positive territory for 2023 as whole however, the rate of growth was moderate and more sustainable than the market has seen in recent years, and this is undoubtedly welcome news for both buyers and sellers alike.”