Already, 2023 is shaping up to be another ‘interesting’ year for Ireland’s property market. While would-be home buyers are seeing a 60 percent increase from last year in the number of properties on the market, prices in Ireland are unlikely to experience an increase in 2023 (UK property prices are expected to fall by up to 6 percent). This influx of properties is largely due to the increasing number of second-hand properties on the market as small landlords continue to sell up, which is bad news for renters who are likely to face even greater difficulties this year. Interest rate hikes and increased cost of living across the board is the expectation for the next 12 months.
Although 2022 saw a 13-year high of new home completions, Lisney’s Outlook 2023 report warns of a decrease in output as the cost of materials rise, resulting in fewer commencements of new homes. As documented here in recent weeks, the Government’s First Home Scheme (FHS) is “playing catch-up” to adjust the property price ceilings for eligible buyers. Michael Broderick, the chief executive of the FHS, has revealed that since its launch last July an increase of 750 applications have been approved, each with an average purchase price of €370,000 and an average support from the State of €71,000.
Current guidelines of the FHS require that first-time buyers – and ‘fresh start’ applicants – must have mortgage approval from a participating lender, as well as a minimum deposit of ten percent. As to avoid over-inflation, the scheme has established price ceilings for various types of properties and counties which are revised and updated every six months. Changes made on January 1st raised the price ceiling for houses to €475,000 in Dublin, Cork City, and Wicklow with other counties also seeing price increases.
In a statement acknowledging a decade of “very significant undersupply in housing” and a lack of affordable housing, Minister for Housing Darragh O’Brien commented on the success of the scheme and its importance to both buyers and the industry. He stated that the fund, worth €400 million, is to be managed “very prudently” and the increase of price ceilings will remain evidence-based, which is to be welcomed by homebuilders.
On the commercial side, the office market is being affected by the rise in costs as well as the sustained move to hubris and virtual work, which has resulted in an increase of “grey” space i.e. space that is leased but not required.
Overall, the real estate market could face significant challenges this year, with a building slowdown set to hit output within the coming months. Keeping an eye on global political and economic issues, paired with adequate supply, is key to maintaining market stability.
Lotus Investment Group