While property price growth is still strong, this could slow as the year progresses, according to Trevor Grant, chairman of the Association of Irish Mortgage Advisers. Influencing factors include “anticipated increased supply coming on stream and mortgage exceptions becoming harder to obtain, which reduces borrowing power accordingly”.
The current housing shortage coupled with strong mortgage approval figures makes it difficult to forecast how the upcoming ECB rate increases will affect house prices in Ireland for the balance of 2022 and into 2023.
Property prices in Ireland reached a seven-year high in March, with prices 15.2% higher than last year and slightly ahead of the February rate of 15.1%.
Meanwhile, the rate of inflation in new home prices is also growing, up from 5.3% in the fourth quarter of 2021. The median price of new homes in March, at EUR 348,500, is 26% higher than the median price (EUR 275,000) of previously owned properties, according to Austin Hughes, a KBC economist.
However, he said that because mortgage loans are increasing more slowly than prices, Central Bank macroprudential rules should “act as an anchoring influence on mortgage lending and, eventually, when the pandemic-related boost to house purchase deposits fades, this should prompt an easing in house price inflation”.