Median property prices in Galway have reportedly, ‘bucked the national trend’ by staying flat during the first quarter of 2023 according to the latest MyHome.ie property price report, but rental markets have seen a 7% increase and a 13% decrease of properties for sale.
The report, which was commissioned in association with wealth management and stockbroking company, Davy Group, looks at national property prices and rental prices compared to figures from the same period in 2022 as well as specific trends for property types.
The Q1 report indicates that a median asking price for a property in Galway county still sits at €285,000, a figure that has stayed flat in the last three months but is a €25,000 increase compared to Q1 2022.
According to the report the price of housing in both Connacht and Ulster was a ‘mixed bag, reflecting volatility in the data,’ but still en route to a slowdown. There had been some fluctuation in the asking prices for specific properties, such as a three-bed, semi-detached in Galway county which saw an overall rise of €16,250 compared to the same period in 2022, but has dropped by €6,000 in the last three months.
Similarly, the asking prices for four-bed semi-detached houses are up €17,000 compared to 2022 but saw a €7,000 drop since the end of 2022, bringing the price to €295,000. While the drop of figures this quarter may be a cause for celebrations for house hunters the joy may be short lived as 2023 has seen a 13% decrease in properties for sale. The average time for a property to go sale agreed in Galway city and county currently sits at just over three and a half months.
With no sign of rental price inflation easing yet, the Residential Tenancies Board (RTB ) indicate that rents rose on a national level by 1.5% in September 2022 bringing the national inflation up to 6.7%. Galway’s rental market saw the second highest increase nationally with rent inflation sitting at 7.1% far above the 2% control figure expected in Rent Pressure Zones (RPZs ).
Introduced in 2016, areas of the country at risk of spiralling rents which could outpace general inflation were assigned RPZs. It is noted in the Q1 2023 report that ‘swathes’ of designated RPZ had seen rental price inflation fall far higher than the outlined 2%. RPZs have been extended in Ireland until the end of 2024 under the Government’s Housing for All plan for 2030, though many will question if they are working, given that Galway sees inflation three times higher than the capped maximum by the end of March.
Conall MacCoille, Chief Economist at Davy, said the data suggested that frothy pandemic-era valuations were now cooling off.
“This quarter’s MyHome report shows another 0.3% fall in asking prices in Q1 2023. Prices fell especially sharply – by 0.8% – in Dublin but rose marginally by 0.2% in the rest of Ireland. We expect the 0.6% decline in the CSO’s RPPI measure of transaction prices in January will continue in the coming months.”
However, he said that Ireland’s property market was not in freefall and would likely fare better than the UK and US markets in the coming months.
“First, demand remains buoyant given the resilient performance of the Irish economy. Second, housing supply remains very constrained. Third, the European Central Bank is not expected to raise interest rates as aggressively as the Bank of England or Federal Reserve. Fourth, the surprise decision by the Central Bank of Ireland to loosen the mortgage lending rules will in time put upward pressure on house prices.”
Mr MacCoille added that the forecast for asking price inflation had been revised to 1.5% for 2023 – from 4%. “This small rise could quite possibly split between falls in the capital and modest price gains in the rest of Ireland. However, the outlook is very uncertain and small price falls can’t be ruled out.
“Why? Asking prices have clearly had a weak start to 2023. Also, the correction in stretched valuations in some areas looks to have further to run. However, as 2023 progresses the tight market, resilient economy and, crucially, the easing of the Central Bank’s mortgage lending rules should support Irish house prices.”
Joanne Geary, Managing Director of MyHome.ie, said that housing supply was still the elephant in the room.
“Unfortunately, stock levels are still a major concern. In an ideal scenario, we need approximately 50,000 new homes built every year, and we are running far short of that target at present.
“We know from our recent consumer sentiment survey that prospective homebuyers are feeling the pinch from the energy and cost of living crises, so now more than ever we need construction activity to ramp up to alleviate the build-up in pressure.”
