Shocking Surge in House Prices in Ireland—Is Your Dream Home Out of Reach?
The most recent Daft.ie House Price Report indicates that, in the year ending in September 2024, house prices in Ireland increased by 6.2%. The third quarter of 2024 also saw a notable 3.1% increase in prices between June and September, reflecting ongoing market pressures amid tightening housing supply.
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Nationwide Trends and Key Figures in House Prices in Ireland
The typical listed price for a property nationwide in Q3 2024 stood at €344,828. This figure is 37% higher compared to the onset of the Covid-19 pandemic, showcasing a steady climb in housing prices over the past few years.
The report indicates that as of 1st September 2024, fewer than 11,900 second-hand homes were available for sale across the country. This is a 12% drop year-on-year and marks the fifteenth consecutive month of declining supply. A significant element driving increased costs is the contraction of supply.
Regional Price Variations
Price hikes varied considerably across different regions. Dublin saw the most significant surge, with prices rising by 4.1% between June and September alone. Since early 2017, this quarter’s increase in the capital has been the largest on record.
Overall, Dublin’s home prices have increased by 6% in the past year. South County Dublin remains the most expensive location, with average prices reaching €708,464. South Dublin City follows closely with an average listing price of €498,533.
Conversely, with an average price of €203,863, Co Leitrim is the most affordable area to buy a house. Not far behind is Co Longford, where prices are slightly higher at €206,857.
Sharp Increases in Rural Counties
Several rural counties saw pronounced annual increases in house prices in Ireland. Co Donegal recorded the highest year-on-year jump, with a 12.4% increase, bringing the average property price to €239,489.
Meanwhile, Co Leitrim experienced an 11.7% rise over the same period, making it one of the fastest-growing rural markets in terms of property prices.
On the other hand, Kilkenny had the smallest annual increase, with prices inching up by only 0.7%, resulting in an average price of €308,431.
Price Trends in Other Major Cities
Outside Dublin, the housing markets in Cork, Galway, and Waterford also experienced notable increases. The average price rise in these cities was roughly 4% higher than a year ago, indicating robust growth.
Limerick saw even stronger growth, with an annual inflation rate of 9.7%. Overall, the average price increase outside the major cities in the year leading up to Q3 2024 was 6.3%.
Scarcity of Second-Hand Homes Driving Prices Up
The supply of second-hand homes continues to be a major issue. According to Ronan Lyons, the report’s author and an economist at Trinity College Dublin, the number of homes entering the second-hand market is dwindling.
“While the volume of new homes being built and bought has largely held up in recent quarters, despite rising interest rates, the same cannot be said of the second-hand market,” says Lyons.
He noted that the scarcity of second-hand homes is particularly acute in Dublin, where new homes are being built, but not at a pace sufficient to meet demand.
Premium Prices in the Capital
The scarcity has led to significant price premiums in Dublin. The typical second-hand home sold in the capital between June and September went for 7.6% above its listed price, the highest premium recorded since 2010.
Conditions in other regions are similar, with the national average premium standing at 5.4% above the listed price, also a record high.
New Home Market Holding Steady
Despite the tightening supply in the second-hand market, the number of new homes being built has remained relatively stable. This consistency has helped temper some of the price pressures, particularly outside the capital.
Nevertheless, the demand for new homes continues to outstrip supply. The government has managed to double the professional construction sector in recent years, but the annual number of homes built is still not enough to address the underlying housing deficit.
Government Policy and the Future of the Housing Market
Ronan Lyons points out that while the government can take some credit for the increase in construction activity, the true number of homes needed each year to address both the existing deficit and new housing needs is nearly twice what was built last year.
“Ensuring housing supply is responsive to underlying requirements will very likely be the dominant issue for the next government as it has been for this one,” he remarked.
The slow decline in mortgage interest rates may provide some relief to potential buyers. However, until the supply of homes—both new and second-hand—improves significantly, prices are likely to continue their upward trajectory.
Long-Term Market Trends
Since the onset of the Covid-19 pandemic, house prices in Ireland have surged by over 37%, reflecting broader economic trends and market imbalances. The current housing situation is a result of several factors, including rising interest rates, disruptions in the supply chain, and a labor shortage.
The tightening supply of second-hand homes is also indicative of deeper structural issues within the housing market. Perhaps as a result of growing interest rates and unpredictability in the economy, many homeowners are staying on their properties longer.
Most and Least Expensive Markets in Ireland
The Daft.ie report highlights a stark contrast between different housing markets. South County Dublin stands out as the priciest location, with average property prices exceeding €700,000.
In comparison, counties like Leitrim and Longford offer more affordable options, making them attractive for first-time buyers or those looking to relocate to rural areas.
However, the rapid price increases in some rural counties, such as Donegal and Leitrim, suggest that affordability may soon become an issue even in these traditionally lower-cost regions.
The Path Forward for Policymakers
As the housing crisis continues, the focus for policymakers should remain on increasing supply. Building more homes, particularly in areas with high demand, is crucial to stabilising the market.
Additionally, measures to encourage the listing of second-hand homes could help alleviate some of the immediate pressure on house prices in Ireland. Prices are expected to stay high unless there is a notable increase in the quantity of houses available for purchase.
Final Thoughts
The Irish housing market is at a critical juncture. While demand remains strong, the shortage of available homes is pushing prices higher, making it increasingly difficult for buyers to enter the market.
The Daft.ie report underscores the urgency of addressing these issues. With the next general election on the horizon, housing is poised to be a dominant issue for voters and politicians alike. The coming months will be crucial in determining the trajectory of the market and the future of housing in Ireland.
