The Dublin property market has experienced significant growth, mirroring the broader trends observed across Ireland. Reports from both Sherry FitzGerald and Daft.ie highlight notable increases in house prices, driven by a persistent shortage of available homes. Let’s delve into the recent data and explore what these changes mean for prospective buyers and the real estate market at large.
In Sherry FitzGerald’s recent announcement, the average value of second-hand homes in Dublin rose by 1.7% in the second quarter of 2024, resulting in a year-to-date increase of 3.8%. Over the past twelve months, this growth rate has surged to 5%, more than doubling the 2.4% annual growth recorded in the previous year. This uptick is part of a broader national trend, where average values grew by 1.8% in Q2 2024, culminating in an annual increase of 5.5%.
Daft.ie’s report aligns with these findings, revealing a 4.7% year-on-year increase in Dublin house prices for Q2 2024. The typical listed price in Dublin now stands at €453,671, reflecting the broader national increase of 6.7% from the same period last year.
However, Dublin’s growth, while robust, appears modest compared to other regions. Cork and Waterford cities saw increases closer to 10%, while Limerick and Galway cities experienced even higher growth, with prices rising more than 12% year-on-year. This disparity raises a critical question: why is Dublin lagging behind other major cities in terms of price growth?
One possible explanation lies in the relative availability of second-hand homes. According to Sherry FitzGerald, the number of second-hand homes advertised for sale in Dublin has seen a substantial decline. In January 2024, there were only 11,050 such homes available, marking a 27% decrease from the previous year. This shortage is even more pronounced in rural and regional areas, affecting transaction volumes and pushing prices upwards.
Ronan Lyons, an economist at Trinity College Dublin and author of the Daft.ie report, underscores the impact of tight availability on housing prices. “Over the past twenty years, a clear pattern has emerged in both sale and rental markets: when availability is tight, prices are pushed upwards,” he notes. The current tightness in the market, exacerbated by significant interest rate increases and a decline in new listings, has resulted in the largest three-month price increase nationally since 2020.
Despite these challenges, there is hope on the horizon. Lyons suggests that as interest rates come down and homeowners come off fixed-rate mortgages, supply should gradually improve. However, this recovery will take time, and tight conditions are likely to persist in the short term.
Meanwhile, the exodus of landlords from the market continues to pose significant issues for the rental sector. Sherry FitzGerald’s analysis shows that only 12% of second-hand home purchasers were investors, while 36% of vendors were investors selling their properties. This trend exacerbates the supply shortage and adds pressure to the rental market.
What does this mean for Dublin’s property market moving forward? The city’s steady price growth, although slower than in other major cities, indicates a resilient market adapting to significant supply constraints. Prospective buyers must navigate a landscape where prices are continually pushed upwards by limited availability and heightened demand.
While Dublin’s property market shows robust growth, it is emblematic of broader national trends driven by supply shortages and increasing demand. The ongoing challenges in the rental market and the gradual recovery of second-hand home supply will be critical factors to watch as we move into the latter half of 2024.