Dublin: House prices in Ireland have risen by 7.5% over the past year, according to a quarterly analysis conducted by MyHome.ie in collaboration with Bank of Ireland. The surge in prices is being driven by a combination of high demand and a severe housing shortage, resulting in significant inflation within the property market. The report notes that in many cases, buyers are paying as much as 20% above the asking price to secure a home. This trend has contributed to the highest rate of annual inflation in the housing market in two years.
The analysis highlights regional differences in house price inflation, with Dublin experiencing a lower rate of increase (6.2%) compared to the rest of Ireland (8.5%). The average house price nationwide stands at €365,000, while in Dublin, the figure is notably higher at €455,000. Outside of the capital, the average house price is in line with the national average of €365,000.
Factors Driving the Price Surge
The report identifies several key factors contributing to the rise in house prices. One in seven (14%) of properties currently on the market has sold for 20% above the asking price, reflecting intense competition among buyers. Residential property price inflation (RPPI) reached 9.6% in July, fuelled by the growing trend of purchasers exceeding the initial asking price. Rent inflation has also increased, rising by 4%.
In addition to inflationary pressures, pay growth has enhanced people’s borrowing capacity. Salaries in Ireland increased by 5.6%, enabling potential homebuyers to borrow more, according to the report.
Outlook for the Housing Market
The Bank of Ireland’s Chief Economist, Conall MacCoille, commented that house price inflation is likely nearing its peak. However, he anticipates that RPPI inflation will begin to moderate in the coming months, with projections suggesting it will settle at 7.75% by the end of 2024.
Housing Shortage Adds Pressure
Beyond inflation, the chronic shortage of homes is also exacerbating the rise in property prices. In September, only 13,100 homes were listed for sale on MyHome.ie, a significantly lower number than before the pandemic. This shortage is being further compounded by Ireland’s growing population, which has increased by 1.9% for the second consecutive year, reaching 5.38 million—the largest growth since the Celtic Tiger era.
MacCoille explained that to meet the demands of this expanding population, Ireland needs to build 206,000 additional homes this year. This contrasts sharply with the estimated 138,000 homes that would have sufficed in 2020. Despite these needs, only 49,000 homes were completed in the 12 months leading up to July. Projections for 2025 estimate that over 40,000 units may be built, still falling short of the required number.
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