Despite the pick-up in supply, with new-home completions rising to a post-crash record of almost 33,000 units last year, prices are again accelerating.
Latest official figures show annualised inflation rose to 5.4 per cent in January, up from 4.1 per cent the previous month. It was also the highest rate of price growth recorded since the beginning of 2023. After dipping into negative territory last year, prices in Dublin also resumed healthy annualised growth of 4.5 per cent in January.
Real estate agents and brokers now say their forecasts for 3 to 4 per cent price growth this year may have to be revised upwards.
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According to one insider: population growth, a strong labour market and the lagged effects of softer mortgage lending rules (the Central Bank of Ireland relaxed them last year).
Real wages are also growing again, boosting affordability. The central bank is predicting that real wages (nominal increases over and above inflation) for the average employee here will rise by almost 9 per cent over the next three years.
And while interest rates were lifted on 10 separate occasions by the European Central Bank in response to the initial price shock, Frankfurt is expected to initiate a cycle of rate cuts this year. Mortgage pricing reflects the interest rate outlook.
The Government’s help-to-buy schemes (there are three — the official Help to Buy scheme, First Home Scheme and Local Authority Home Loan initiative) are also playing their part.
The latest figures show the price of new dwellings was 9.2 per cent higher on an annual basis in the final quarter of last year, double the headline rate of inflation for the market as a whole.
John McCartney, director and head of research at BNP Paribas Ireland, also thinks “supply growth will stall this year, and maybe even fall, which will further feed into the inflation”.
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