A second real estate price report shows that prices are falling. But the authors emphasize that we are not heading for another collapse in real estate prices.
Sking prices fell in the first three months of the year, according to MyHome.ie – it’s the third straight quarter that values have fallen. They were down 0.3 percent in the first quarter, but are up 3.2 percent year over year.
Homes are now selling for just 1 pc. above the asking price compared to 6 pc. last year this time.
Last week, a report from Daft.ie had similar findings about falling asking prices for properties.
MyHome.ie said house prices in Dublin had fallen for four consecutive months and were now 2 per cent below the peak level they reached in September last year.
But the report’s authors say they don’t expect a free fall in prices due to a number of factors, something that happened when the Celtic Tiger exploded.
These include scaled back expectations of further European Central Bank ( ECB) rate hikes, new credit rules and continued strong demand.
The report’s authors said the real estate market was instead undergoing a correction due to overvaluations.
This is particularly the case for Dublin, where the average price in January was nine times the average income. This is almost double what people are allowed to borrow under the central bank’s credit limits.
Annual asking price inflation for this year is now forecast at 1.5 percent, according to an analysis of the MyHome.ie report by Davy Stockbrokers economist Conall Mac Coille.
The typical asking price for a house nationally is now €310,000, down 0.3 percent in the first three months of the year compared to the previous quarter.
Dublin’s typical or average asking price is now €395,000, down 0.8 per cent on the quarter and down 0.6 per cent over the past year.
Outside Dublin, prices continue to rise, with the average asking price at €265,000, up 0.2 per cent in the quarter and 5 per cent over the past year.
MyHome.ie said a modest slowdown in asking price inflation had continued in the first quarter. The market is constrained by poor supply and affected by a range of both positive and negative factors.
Similar to a recent report from the Banking and Payments Federation Ireland, the property website also found that first-time buyers are borrowing more.
This comes after the Central Bank relaxed its lending rules, allowing new buyers to borrow up to four times their income.
The average mortgage approval for first-time buyers reached a new record of €281,350 in February.
In the first three months of this year, there were only 13,600 homes for sale on MyHome.ie, which is still well below the pre-pandemic figure of 20,000.
Mr Mac Coille, the author of the report, said the data suggested frothy pandemic valuations were now cooling.
However, he said the surprise decision by the Central Bank to relax mortgage lending rules will put upward pressure on house prices over time.