ASKING PRICES ROSE substantially in the second quarter of this year, with the median asking price for a house in Dublin increasing to €403,000, according to a new report.

The MyHome.ie/Davy property price report found asking prices rose 5% compared to the previous quarter.

The median asking price nationally is now €320,000 and outside of Dublin it is €270,000, which is a 6.1% quarterly increase.

The MyHome data show that homebuyers were bidding up transaction prices 6.6% above asking price at the median.

Figures from the Central Statistics Office last week showed residential property prices had grown by 14.2% nationally over the 12 months to April

Although prices are up on the previous quarter, annual asking price inflation has slowed to 10.9% nationwide.

Author of the report, Conall MacCoille, Chief Economist at Davy, said that 2022 should be a year of two halves, with price inflation slowing down in the second half of the year.

“Double-digit inflation and sharp price gains are set to give way to greater concerns on affordability, the economic outlook and the impact of the ECB raising interest rates,” he said.

He said that even though the slowdown has been marginal this quarter, anecdotal evidence from estate agents suggests that the momentum driving asking price inflation earlier in the year, is starting to slow.

In April, the average mortgage approval was €283,700, up 9.4% on the year, now above Celtic Tiger era levels for the first time.

“It may well be that Irish banks have taken a less conservative approach to their lending than during the pandemic, specifically, granting additional exemptions to the 3.5 times regulatory threshold on loan-to-income (LTI) ratios,” MacCoille said.

He said it is unlikely that will will be a repeat of the Celtic Tiger era as mortgage lending rules have kept the market in check. 

“The expected rise in interest rates from the ECB, while notable, will also not have the same negative effect given the Irish market is well insulated at present,” he said. 

Excess demand in the market meant, despite the increase in the average mortgage approval, 20% of homebuyers with mortgage approval are currently failing to secure a property each year.

MacCoille said there were some improvements in housing availability, with the number of properties listed for sale flattening off after consistent declines over the past two years.

However the 12,700 properties for sale are still well below pre-pandemic levels, he said.

“The situation is better in Dublin with the number of listed properties up 7% on the year.”

However, MacCoille said the average time to sale agreed has fallen to a fresh record low of 2.6 months, which is “indicative of the exceptionally tight housing market”.

The possibility of a modest fall in Irish house prices can’t be ruled out, he said, “correcting some of the froth built-up since the beginning of the pandemic”.

However, double-digit declines or a repeat of the Celtic Tiger era housing crash “seems very unlikely”.

The report also noted that upward pressures on rents have continued into the first half of this year, up 11.2% in the year to May.