Ireland’s Housing Market: A Race Against Time
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The Irish housing market continues to grapple wiht soaring prices, fueled by a persistent shortage of homes. While the rate of growth has slowed slightly, the situation remains undeniably concerning. According to the Central Statistics Office (CSO),house prices have climbed by 9.4% in the year leading up to November 2024.
Dublin, as usual, has seen the most dramatic price increases, with a 9.6% surge in property values. Prices outside the capital have also risen substantially, by 9.2%. This inflationary trend has created a highly competitive market,with buyers frequently enough finding themselves in bidding wars.
“Agents are reporting strong prices with competing buyers in a limited market continuing to push beyond asking prices, particularly in high demand areas,” observed Pat Devitt, chief executive of the Institute of Professional Auctioneers & Valuers (Ipav). The Ipav warns that prices could accelerate even further by 10% this year unless there’s a substantial increase in housing supply.
However, the situation is far from uniform across the country. While some regions, like the border counties (Cavan, Donegal, Leitrim, Monaghan, and Sligo), experienced a notable 13.8% jump in house prices, others, such as the mid-east (Kildare, Louth, Meath, and Wicklow), saw a more modest 6.5% rise.
November 2024 saw 4,443 dwelling purchases registered with the Revenue Commissioners, marking a 3.8% decrease compared to the same month in the previous year. this slight dip might indicate a cooling market, but the median price for dwellings purchased in the past year reached a significant €350,000. This figure varied greatly across counties, with Leitrim and Longford recording the lowest median price of €180,000, while Dún Laoghaire-Rathdown topped the list at €654,999.
Dublin 6 (D06) emerged as the most expensive Eircode area with a median price of €725,000, while Clones in County Monaghan (H23) had the lowest median price at €127,000, highlighting the stark regional disparities within the housing market.
Of particular concern is the fact that Dublin residential property prices have now surpassed their pre-crash peak of February 2007 by 4%, while prices outside Dublin are a staggering 16.7% higher than their May 2007 peak, raising serious questions about affordability and potential bubbles.
“While the rate of annual house price growth has eased slightly, at 9.4% nationally, it is still very high. Given this steep house price inflation, all eyes will be on the new Government to see if it can tackle this country’s seemingly insurmountable housing crisis and deliver on its promise to deliver 300,000 homes by …”
this crisis is not confined to Ireland. Spain, for example, is also facing significant challenges in addressing its housing market difficulties. The sense of urgency to find solutions is palpable. Rachel McGovern, deputy chief executive at Brokers Ireland, stated, “It’s beyond time for talking about housing targets; all people want to know about now is how new homes are going to be delivered.”
Trevor Grant, chairman of Irish Mortgage Advisors, paints a stark picture, warning, “By the end of 2030, we’re going to be in real trouble.”
Ireland’s Housing Market: A Perfect Storm
Ireland’s residential property market is experiencing a surge in prices, with the Central Statistics Office reporting a 9.4% increase in the year to November. This upward trajectory is driven by a confluence of factors, primarily a chronic shortage of housing supply, fueling intense demand.
“The price growth we’re seeing is primarily driven by the persistent shortage of housing supply,” explains Dr. Aoife Murphy, Senior Economist at the Economic and Social Research institute (ESRI).”Demand is strong, fuelled by population growth and pent-up demand from the pandemic years, while the supply of new homes has not kept pace. This imbalance is putting upward pressure on prices.”
Dublin, as Ireland’s economic powerhouse, is experiencing disproportionate price increases, with a rise of 9.6%. “dublin’s strong price growth is largely due to its status as the economic hub of Ireland,” notes Dr. Murphy. “It attracts a significant number of jobs and people,driving up demand for housing. Additionally, the relative scarcity of land in Dublin, compared to other parts of the country, also contributes to higher prices.”
Within Dublin, a distinct difference emerges between house prices and apartment prices. While houses have surged by 9.9%,apartments have seen a more moderate increase of 8.3%. Dr. Murphy attributes this to several factors: “Houses generally have more space and may be more desirable to families. Secondly, there’s been a significant increase in apartment construction in Dublin in recent years, which has helped to ease some of the pressure on apartment prices. though, the demand for houses remains very strong.”
Even though the 9.4% rise in prices represents a slight slowdown from the previous month, it’s still a significant increase.Dr. Murphy cautions, “The slight slowdown in the annual growth rate is encouraging, but it’s significant to remember that prices are still increasing at a rapid pace. The market is cooling slightly, but it’s still very much a seller’s market. The key to lasting growth in the housing market is a significant increase in housing supply.”
Pat Devitt, from the Institute of Professional Auctioneers and Valuers, has voiced a concern that prices could escalate by another 10% this year unless there’s a substantial increase in housing stock. Does Dr. Murphy share this concern?
Is Ireland Building Enough Homes? An Expert Weighs In
The Irish housing market is in a state of flux, with soaring prices and a shortage of available homes causing significant concern. Dr. Aoife Murphy, an expert in the field, shares her insights on the crisis and what needs to be done to address it.
“While the government has set ambitious goals for housing supply, we’re still not building enough homes to meet demand,” Dr. Murphy states, highlighting the central issue. “If supply doesn’t increase substantially, we could see further price inflation, which would be detrimental to affordability and social welfare.”
This urgency calls for a multi-faceted approach, according to Dr. Murphy. she advocates for streamlining the planning process to expedite the development of new housing projects.
“Providing tax incentives for developers to build affordable housing is also crucial,” she emphasizes, acknowledging the need to make building more affordable for developers.
Dr. Murphy also stresses the importance of investing in infrastructure to unlock new housing sites and encouraging a wider variety of housing options. This includes exploring innovative models like co-living and affordable rental schemes.
For Dr. Murphy, open dialog is key to finding lasting solutions. “It’s crucial that we continue to discuss these issues openly to shape a more lasting future for Ireland’s housing market,” she concludes.
What specific policy changes does Dr.Murphy suggest are necessary to address the housing supply shortage and regional disparities in Ireland?
Archyde News: Interview with Dr. aoife Murphy, Senior Economist at the Economic and Social Research Institute (ESRI)
Archyde (A): Dr. Murphy, thank you for joining us today to discuss the current state of ireland’s housing market. The Central Statistics office recently reported a 9.4% increase in house prices nationally. What are the key factors driving this surge?
Dr. Aoife Murphy (AM): Thank you for having me.The primary driver behind this trend is the persistent shortage of housing supply. We’re seeing strong demand fueled by population growth and pent-up demand from the pandemic years, but the supply of new homes hasn’t kept pace. This imbalance puts upward pressure on prices.
A: Dublin, in particular, has seen a 9.6% increase. What makes the capital so vulnerable to these price increases?
AM: Dublin’s status as Ireland’s economic hub attracts a important number of jobs and people, driving up demand for housing. Additionally, the relative scarcity of land in Dublin compared to other parts of the country contributes to higher prices. The greater Dublin area has a lower housing supply-to-demand ratio than any other region in Ireland.
A: Despite the price increases, we’ve seen a slight dip in the number of dwelling purchases. Does this indicate a cooling market, or is it simply a seasonal fluctuation?
AM: It’s crucial to consider seasonal fluctuations when interpreting these figures.while the slight decrease in dwelling purchases might suggest a cooling market, we must also look at the median price for dwellings purchased, which reached a significant €350,000. This indicates that while there may be fewer transactions, the prices at which these transactions occur remain high.
A: Indeed,the affordability crisis is a significant concern. Dublin 6 (D06) emerged as the most expensive Eircode area,with a median price of €725,000,while Clones in County Monaghan had the lowest at €127,000. How worried should we be about these regional disparities?
AM: The stark regional disparities reflect varying degrees of demand and supply responsiveness across the country. While some regions like Dublin may be experiencing intense pressure due to demand outstripping supply, other areas might be dealing with issues of Serviced Site Shortages or limited housing types that meet local demand.Addressing these disparities requires tailored solutions for different regions.
A: Given the urgency of the situation, how confident are you that the new government will succeed in its promise to deliver 300,000 homes by 2030?
AM: The scale of the challenge before us cannot be overstated. To meet this target, we’ll need aspiring and coordinated action from all stakeholders, including the public sector, private developers, and communities. Success will require substantial investment in housing infrastructure, streamlined planning processes, and innovative solutions to deliver a mix of housing types that cater to diverse needs and budgets. While I’m hopeful that the right policies can make a significant impact, the task is certainly daunting.
A: Dr. Murphy, thank you for sharing your insights and perspective on ireland’s housing market. We appreciate your time and expertise.
AM: My pleasure. Thank you for the opportunity to discuss this critically important topic.
