House price inflation accelerated again in the first quarter on the back of what the State’s largest estate agent said was “a chronic lack of supply in the second-hand market”.
Sherry FitzGerald said asking prices for second-hand homes nationally rose by 2 per cent between January and March and were up by 5.1 per cent on an annual basis. This compared with annualised growth of 3.6 per cent this time last year.
In the capital, asking prices for second-hand homes rose at an even swifter rate of 2.1 per cent during the quarter, while price inflation outside Dublin increased by 1.9 per cent.
“One of the key factors sustaining this strong price growth is a chronic lack of supply in the second-hand market,” Sherry FitzGerald managing director Marian Finnegan said.
In January, just 11,050 second-hand properties were listed for sale “representing a mere 0.6 per cent of the entire private housing stock in Ireland, with rural and regional Ireland disproportionately affected,” she said.
The company has been predicting house prices nationally to rise by 2-3 per cent this year. Ms Finnegan said an extreme shortage of stock in the first quarter drove an acceleration in asking prices but “we expect the pace of inflation to moderate somewhat” as more supply comes on stream.
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Sherry FitzGerald’s latest quarterly report on the residential market here noted there were almost 60,200 housing transactions in 2023 (excluding block sales and homes acquired for social housing), up 1.1 per cent on the previous year.
Activity in the second-hand market saw a minor reduction, with about 49,650 units sold in 2023, a reduction of 50 units transacting when compared with 2022, it said.
The company said the shortage of second-hand stock in rural counties such as Longford, Kerry, Roscommon and Donegal saw transaction activity in the second-hand market decline by more than 8 per cent.
Conversely the company said the new homes market witnessed a modest uptick in transaction activity last year, with 10,550 transactions recorded in the year, a 7 per cent increase on the previous year, with Dublin and its commuter-belt counties Kildare, Meath and Wicklow accounting for more than half (56 per cent) of transaction activity.
In its report, Sherry FitzGerald again highlighted the exodus of landlords from the market, noting that in the first quarter just 12 per cent of purchasers of second-hand homes with the company were investors, while 35 per cent of vendors were investors selling their properties.
“While it is anticipated that house completions levels will improve again this year, the desired V-shaped recovery in supply has not occurred,” Ms Finnegan said.
“As such the deficit in supply is likely to persist. This shortage in new supply has had a ripple effect, adversely affecting the supply of other properties to the market. This pattern is particularly noticeable in more rural locations, as is evidenced in contracting transaction volumes,” she said.
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