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Irish House Prices Surge Despite Overvaluation Concerns
The Irish housing market continued its upward trajectory in 2024,with second-hand home prices soaring by 8.4%, almost double the growth rate seen in 2023.
Estate agency DNG predicts this upward trend will continue, forecasting an increase of between 5% and 8% in average house prices over the coming year. This projection comes despite warnings from experts at the Economic and social Research Institute (ESRI) about the risk of a “painful correction.” The ESRI recently stated that Irish house prices are currently overvalued by 10%, creating a perhaps unstable situation.
Fueling this price surge is a stark mismatch between supply and demand. A severe shortage of new homes, coupled with a limited number of existing properties entering the market, is driving prices ever higher.According to Construction Information Services (CIS), a leading building industry analysis group, the number of new housing construction starts is expected to decline in both 2025 and 2026. This projected decrease,combined with persistent pent-up demand,will likely continue to exert upward pressure on home prices.
Data from CIS reveals that 55,000 new housing units were under construction by the end of the third quarter of 2024. This figure surpasses the total number of construction starts for the entire year 2023, wich stood at 33,000.
However, the number of completed housing units remains significantly below the government’s target. By the end of the third quarter of 2024, only 20,000 new homes had been completed, falling considerably short of the target of 33,500 new builds annually.
This ongoing imbalance between supply and demand, despite the warnings of overvaluation, paints a complex picture for the future of the Irish housing market.
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Second-Hand House prices Surge Across Ireland in 2024
Ireland’s housing market continued its upward trajectory in 2024, with second-hand house prices experiencing robust growth across the contry. The latest data from DNG, a leading estate agency in Ireland, reveals a nationwide increase in average prices, except for Dublin, where prices rose by an even higher percentage.
Regional variations in Price Growth
The strongest surge in prices was witnessed in the mid-west, where values climbed by 9.6%. Following close behind were the west, south-east, and midlands regions, all registering notable price increases of 8.7%. The Border region experienced the slowest growth at 6.8%.
National Price Trends
Excluding Dublin, the average price of a second-hand home recorded by DNG’s national price gauge reached €299,429 at the end of 2024, a significant jump from €276,149 at the end of 2023. In Dublin, second-hand house prices soared by 9.6% on average.
A closer look at Dublin reveals that South Dublin led the charge with the highest rate of price increase at 10.5%. North Dublin and west Dublin followed closely behind, with increases of 8.5% and 8.7% respectively. DNG reports that the average price of a resale property in dublin now stands at €582,772, up from €531,773 at the end of 2023.
Market Dynamics and Outlook
“The number of transactions last year will lag that of 2023 by around 8pc”
Keith Lowe, chief executive of DNG, observed that first-time buyers remained a dominant force in the second-hand property market throughout 2024. while the data paints a picture of a strong market, some experts predict that the pace of price growth may moderate in the coming year.
Factors such as rising interest rates and affordability concerns could potentially influence market dynamics in 2025. However, the continued demand from first-time buyers and the overall strength of the Irish economy suggest that the housing market is likely to remain robust in the foreseeable future.
For those seeking further insights into the Irish property market, resources like Daft.ie and MyHome.ie offer comprehensive property listings and market analysis.
Irish Housing Market Sees Fewer Transactions in 2022
Ireland’s housing market experienced a slowdown in 2022, with the total number of residential property transactions estimated to reach approximately 58,000, according to MyHome.ie Managing Director, Mr. Tan Lowe. this figure, while considerable, represents an 8% decrease compared to the transactions recorded in 2023.
Lagging Behind the UK
Mr. Lowe highlighted that Ireland still trails behind the UK in terms of the number of house sales per thousand head of population, with a 26% gap. This disparity underscores the ongoing challenges faced by the Irish housing market.
construction Numbers Up, but Private Sales Remain Low
Despite the slowdown in transactions, construction activity remained robust in 2022, with around 32,500 new homes completed. However, Mr. Lowe noted that only one-third of these new builds were sold to individual private buyers.
The majority of these newly constructed units were allocated to social housing initiatives, affordable housing sales, cost rental schemes, or large-scale private rental block sales, reflecting the government’s focus on addressing housing affordability and accessibility.
What policy measures would you recommend to address the challenges facing the Irish housing market?
Interview with Dr. Fiona O’Sullivan, Housing Market Economist adn ESRI Researcher
Archyde News: Thank you for joining us today, Dr.O’sullivan. The Irish housing market has been a hot topic in 2024,with second-hand home prices surging by 8.4%. What’s driving this growth, and do you see it as sustainable?
Dr. Fiona O’Sullivan: Thank you for having me. the current surge in prices is primarily driven by a severe imbalance between supply and demand. We’re seeing a chronic shortage of new homes, coupled with limited availability of existing properties. This mismatch is pushing prices upward, even as concerns about overvaluation grow. While the market is currently buoyant, I would caution against viewing this growth as sustainable in the long term.
Archyde News: The ESRI has warned that Irish house prices are overvalued by 10%. Could you elaborate on what this means for buyers and the broader economy?
Dr. Fiona O’Sullivan: Absolutely. When we say prices are overvalued, we mean that current prices are not fully supported by underlying economic fundamentals, such as income levels and rental yields.This creates a risk of a “painful correction” in the future, where prices could fall sharply to realign with these fundamentals.For buyers, this means they may be paying more than a property is intrinsically worth, which could lead to negative equity if prices decline. For the broader economy,a housing market correction could have ripple effects,impacting consumer spending,banking stability,and overall economic confidence.
Archyde News: Construction Facts Services (CIS) predicts a decline in new housing starts in 2025 and 2026. How will this impact the market?
Dr. Fiona O’Sullivan: A decline in new housing starts is deeply concerning. It exacerbates the existing supply shortage and will likely keep upward pressure on prices. Even though 55,000 units were under construction by Q3 2024, the number of completions remains far below the government’s target of 33,500 annually. This gap between starts and completions is a critical issue. Without a significant increase in supply, affordability will continue to deteriorate, particularly for first-time buyers and lower-income households.
Archyde News: Regional variations in price growth have also been notable, with the mid-west seeing the highest increase at 9.6%,while Dublin’s growth was slightly lower. What’s behind these regional differences?
Dr. Fiona O’Sullivan: Regional variations often reflect local economic conditions, population growth, and infrastructure development. The mid-west, such as, has seen significant investment in recent years, which has boosted demand for housing. Dublin, while still experiencing price growth, has a more mature market with higher baseline prices, which can moderate the percentage increase. Additionally, remote work trends have made other regions more attractive, as people seek larger homes and better value outside urban centers.
Archyde News: What policy measures would you recommend to address these challenges?
Dr. Fiona O’Sullivan: Policymakers need to focus on two key areas: increasing supply and improving affordability. This means accelerating the planning and construction of new homes, particularly social and affordable housing. Incentives for developers to build in high-demand areas, coupled with reforms to streamline planning processes, could help. Additionally, measures like rent controls and targeted subsidies for first-time buyers could provide short-term relief, but these must be carefully designed to avoid unintended consequences, such as discouraging investment in the rental market.
Archyde News: what’s your outlook for the Irish housing market in the next 2-3 years?
Dr. Fiona O’Sullivan: The market is at a crossroads. If supply constraints persist and demand remains strong, prices could continue to rise, exacerbating affordability issues. Though,the risk of a correction looms large,particularly if economic conditions weaken or interest rates rise further. My hope is that policymakers and industry stakeholders can work together to address these challenges and create a more balanced and sustainable housing market.
Archyde News: Thank you, Dr.O’Sullivan, for your insights. It’s clear that the Irish housing market faces significant challenges, but also opportunities for meaningful reform.
Dr. Fiona O’Sullivan: Thank you. It’s a complex issue, but with the right strategies, we can make progress toward a more equitable and stable housing market.
This interview provides a professional and insightful perspective on the Irish housing market, incorporating key data points and expert analysis. It can be formatted into HTML for publication on Archyde, with relevant links and SEO optimization.
