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Asking price inflation eases to 6% amid greater housing supply - Daft.ie

Similar to their counterparts at MyHome.ie, the report from Daft.ie recorded asking prices falling by 0.4% in the final three months of the year
Similar to their counterparts at MyHome.ie, the report from Daft.ie recorded asking prices falling by 0.4% in the final three months of the year

An increase in the supply of properties for sale saw the rate of growth in the prices being sought for homes falling to 6% in 2022, according to a report by property website Daft.ie.

That compares to asking price inflation of just over 8% in 2020 and 7.7% in 2021.

The report noted that the number of homes available to buy on December 1 stood at just over 15,200, which was up a third on the same date the previous year.

However, it was significantly below the 2019 average of 24,200.

"Given that the market pre-Covid19 was effectively in balance, with a slight fall of 1.2% during 2019, the sales market in Ireland was not over the course of the last 12 months one where supply was adequate to meet demand," Ronan Lyons, Economics Professor at Trinity College and author of the reports for Daft.ie, said.

"This is what the headline indicator from this latest Daft.ie Report tells us."

Similar to their counterparts at MyHome.ie, the report from Daft.ie recorded asking prices falling by 0.4% in the final three months of the year.

That followed the late summer quarter where prices were effectively static.

The last time there were two consecutive quarters of prices not rising - which happened in the second half of 2019 - it was interpreted as a sign of supply, both new and second hand, coming up to the levels needed to meet market demand.

"Supply has recovered - slowly and steadily rather than rapidly - with 64,000 homes put up for sale during 2022, a level of supply similar to 2018," Ronan Lyons noted.

"Any loss of supply, though, takes time to be replaced and while the flow of properties onto the market has almost fully recovered, availability - at just over 15,000 homes on December 1 - remains closer to the pandemic low than the pre-pandemic level," he added.

He noted that demand for housing had remained strong throughout 2022 but there were reasons to believe that this year might see demand cooling.

"On the one hand, interest rates have risen. One mortgage market provider started the year with fixed rates below 2% but will enter the new year with rates for the same product of almost double that," Mr Lyons explained.

That, he said, feeds through to affordability and the maximum loan a provider will lend.

There are also wider economic conditions feeding through with a slowdown expected in much of the global economy in the year ahead.

"Such uncertainty makes people less confident about the future. We can see this in the expected rate of change in housing prices. At 0.2% in December, this is the weakest expected increase since 2020, when lockdown meant that people expected - initially at least - that prices would fall," he added.

The economist also predicted that the first six months of 2023 will be "reasonably quiet" in terms of price increases.

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He said it was clear from the report that conditions in the market have changed, and that the Dublin market is nearly back to pre-Covid levels.

Speaking on Morning Ireland, he said that change can be seen in the report's regional figures as well as quarter to quarter figures.

He said that the mismatch between supply and demand has changed, with a mixture of weakening demand and increased supply

"Supply was far worse affected than demand in Covid, and we're only still recovering from that in the market. Dublin is almost back at pre-Covid levels but rest of the country still has a way to go," he explained.

Speaking about a referendum on housing, he said that he expected the Commission on Housing will send something to the Minister for Housing in the next six weeks.

He said that the timing depended on a committee recommending the wording to the Commission. They will decide on that in the next four to six weeks and then it goes to the Housing Minister to be considered for a referendum.