Ireland is facing a severe housing shortage, with one in seven properties selling for 20% above the asking price, according to a recent analysis by MyHome.ie. To match the housing-to-person ratio in the UK, Ireland would need an additional 206,000 homes this year alone. This deficit has been growing in recent years, with 138,000 fewer homes in Ireland compared to the UK in 2020, accounting for the relative population sizes of the two countries.
The Chief Economist at Bank of Ireland, Conall Mac Coille, highlighted the intense pressure on the housing market due to Ireland’s population and labor market growth. He noted that Ireland’s population grew by 1.9% for a second consecutive year, reaching 5.38 million. To catch up with the UK’s housing stock, Ireland would need to build an additional 206,000 homes.
The report also revealed that annual asking-price inflation was 7.5% nationwide from July to September, with Dublin experiencing a rate of 6.2% and the rest of Ireland at 8.5%. The median asking price in the quarter was €365,000, with Dublin at €455,000 and the rest of the country at €315,000.
Despite strong demand, residential transaction volumes in the first half of the year were down 5% compared to the previous year. The number of properties listed for sale on MyHome.ie last month was only 13,100, significantly lower than pre-pandemic levels. However, housing starts have increased to 49,000 in the year leading up to July, and MyHome expects completions to rise above 40,000 units next year.
The concern now is that the tight housing market is creating a cycle where potential vendors are hesitant to sell their homes due to fears of not being able to secure a new property. This has led to properties being sold for 7% over the asking price, with 14% of transactions closing for at least 20% over the asking price. Average mortgage approval values have reached a new record high of €318,300, up 6.2% from the previous year.
Despite the rising number of housing starts, property price inflation is expected to decrease in the coming months and end the year at 7.75%. The rate of rent inflation has also softened to 4% annually. The housing market in Ireland is facing significant challenges, and addressing the housing shortage will be crucial to ensuring affordability and stability in the future.
