Real estate markets across the globe are slowing in response to higher borrowing costs. Some of the more over-priced ones in the US, Canada and New Zealand have already gone into reverse. Whether the market here is headed for a price correction or merely a slowdown is a key question for prospective buyers.
Estate agents from Sherry FitzGerald to DNG insist we will experience just a slowdown because of the ongoing lack of supply and demographic forces underpinning the market.
Sherry FitzGerald managing director Marian Finnegan said last week that while demand for homes would be squeezed by shrinking household budgets and higher interest rates, chronically low levels of supply would keep a floor on prices. She made a distinction between those at the upper end of the market – discretionary buyers – and those in what she described as “the essential” part of the market, first-time buyers and movers.
The former might be persuaded to defer buying because of the changed economic outlook whereas the latter were motivated out of need and therefore less likely to defer purchasing.
Planning regulator Niall Cussen: We can overcome the housing crisis, ‘if we put our minds to it’
On his return to Web Summit, the often outspoken chief executive Paddy Cosgrave is now an epitome of caution
Surviving a shake-up: is restructuring ever good for staff?
The Irish Times Business Person of the Month: Dalton Philips, Greencore
That said the majority of those in the essential part of the market are reliant on mortgage funding, the cost of which is rising, while many of those in the discretionary segment are cash buyers.
A report by property group Owen Reilly on Monday suggested that 60 per cent of homes it has sold in Dublin’s high-end period home market were to buyers who did not need a mortgage. Its average selling price for period home properties in Dublin was just over €1 million, it said. Dublin 4, which includes Ballsbridge, Donnybrook and Sandymount, had the highest average selling price at €1.8 million.
A separate report on Monday by UK property website Rightmove pointed to slowdown in buyer demand in the UK market on the back of rising mortgage costs, with the most impact group being first-time buyers.
Rightmove’s monthly house price index showed first-time buyers, traditionally the strongest part of the market, were the most hesitant in the face of the higher interest rates, with demand down 26 per cent in October.
Housing demand is an amalgam of forces. That’s why predicting the market is so difficult.
