Prices will have risen by 5 per cent on average by the end of year, while second-hand homes have sold well all year and the market is expected to remain robust in 2023

This year has been a strong one for both the second-hand and new homes housing markets across the capital and around the country. As forecast at the beginning of the year, the rate at which prices are rising in 2022 continues to moderate – which is welcome news for those looking to buy a home.

For the year as a whole, prices will have risen by 5 per cent on average by the end of year, which is a strong result considering the current high inflation and increasing interest rate environment.
Second-hand houses have sold well all year. The top end of the market has been particularly active, and stronger than we witnessed in 2019 prior to Covid-19, with a large number of domestic and foreign buyers competing for high-value homes.

Properties in the €2 million to €4 million price range have seen the highest activity levels at the upper end of the market, and our agency has seen a sizeable uptick in sales at this level across the capital.
It is noteworthy that at the time of writing, only 24 private home sales with a value of €4 million or more have completed so far this year, mainly due to the lack of available homes at this price level.
Starter to mid-price homes have also sold well, with houses that have been refurbished or presented in ‘show house’ condition achieving premium prices.

Homes requiring refurbishment have not fared as well as buyers grapple with increased refurbishment costs and concerns over getting labour to carry out upgrade works post purchase. Competition among buyers has remained robust at the lower price levels, driven primarily by strong demand from first-time buyers armed with loan approvals.

The length of time it takes to agree a sale on a residential property has remained in the six to ten-week range for most of the year, but sales have been slower to complete as anecdotal evidence suggests mortgages are taking longer to be formally approved. This is likely due to the reduction in the number of high street mortgage providers with the unfortunate exit of Ulster Bank and KBC from the Irish market.

The new homes sector has done particularly well this year, with the Help to Buy Scheme being an important first-time buyer incentive – essentially acting as a 10 per cent first-time buyer’s grant up to a maximum of €30,000. The supply of new homes available to buy on the open market has remained limited, as many of the new homes schemes being built have been sold to the Private Rented Sector (PRS), or to social and affordable housing providers, rather than being sold singularly to private buyers.

The new Shared Equity ‘First Home Scheme’ which was launched recently is a very attractive proposition for first-time buyers in addition to the Help to Buy Scheme and is allowing more buyers to qualify to purchase newly built homes. Rents on properties let for the first time have continued to rise at an unprecedented rate and will end up over 8 per cent higher than last year. Meanwhile, all other rentals have risen by 2 per cent – the maximum allowable under current government rent controls.    

A situation now exists where you could have two identical two-bedroom neighbouring apartments let at significantly different rents. One tenant may be paying €1,200 per month due to rent controls and the next-door neighbour could be paying €2,000 per month for the identical apartment. This does not seem equitable.
Landlords subject to rent controls have accelerated their exit from the rental sector this year due to these restrictions, the current tax regime and increasing interest rates. This exodus, which DNG estimates to exceed 7,000 net leavers per annum, will lead to further pressure on the rental sector in 2023. 

The Irish economy has continued to perform well in 2022, with economic growth (GDP) of 8.1 per cent forecast for the year as a whole by the Economic and Social Research Institute and GDP growth of 4.4 per cent forecast next year – more than double the EU average forecast and well ahead of Britain.
Ireland’s population has experienced significant growth in recent years with the latest Census results indicating an increase in population in the order of 368,000 between 2016-2022, which continues to underpin housing demand across the country. 

Employment levels remain high, with some businesses finding it increasingly difficult to recruit new talent. While the technology sector has been under pressure, this is likely to be short-lived and will not materially impact demand in the housing market. 

Eighty per cent of buyers are currently taking fixed-rate mortgages, which is understandable as they give certainty and relatively speaking are attractive with five-year fixed-rate mortgages still available in the region of 3 per cent. A four-year fixed rate Green Mortgage with Haven is available at 2.5 per cent at the date of writing this article. 

Taking the above into account, we believe that the market will remain robust next year, but the level of price increase will continue to moderate, with low single-digit house price growth anticipated for the year ahead. The number of sales will remain strong, and is likely to exceed 2022 levels by 5 to 7 per cent.
Keith Lowe is the chief executive of DNG.