Houses prices nationally are now just 2.1% off their Celtic Tiger peak, having increased 15.2% in the year to the end of the March, according to the latest figures from the Central Statistics Office (CSO).

Average prices in Dublin increased 12.7% in the 12 months to March, and 17.3% outside the capital.

Property prices have increased 120% since their lowest point post-crash in early 2013.

In Dublin, residential property is 10.1% cheaper than it was in February 2007, but in the rest of Ireland prices are just 3.3% lower than record levels from May 2007.

Austin Hughes, chief economist with KBC Bank Ireland, commented that there are some tentative signs in the March data that the ‘heat’ in the housing market may be easing slightly.

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“The pace of price increase on a monthly basis has eased markedly of late, with the 0.6% increase between February and March the slowest monthly rise in a year, Hughes noted. “While this slowdown is partly seasonal, adjusting for this factor prices are currently increasing at a slower pace than at any time since last summer.   

“A further tentative indicator of a slight cooling in the property market climate is a marginal 0.8% drop in transactions in March from a year earlier. Although the latest number could be depressed by delays in filings of recent sales, it does represent the first year on year drop since January 2021. Moreover, it continues a trend slowdown in transactions growth evident since last autumn.”

Nevertheless, in the first quarter of 2022 the increase in property price inflation roughly doubled from a year earlier to 6.2% while inflation for existing properties was almost six times higher than a year earlier at 17.8%.

“This surge reflects both the incidence of ‘bidding wars’ among prospective purchasers for existing properties as well as a marked shift in purchasing to areas of the country where new supply is negligible,” said Hughes.

“At the same time, new supply has been concentrated in more expensive areas where affordability constraints are more significant, thereby dampening the pace of increase in new builds.

"While sharply rising input cost inflation may put upward pressure on new housing prices, affordability constraints will remain an important counterweight in this area.”

Hughes believes that a further small acceleration in Irish house price inflation in the next month or two can’t be ruled out, but the March data show tentative signs that recent pressures may have peaked.

“More importantly, as the stock of pandemic-related deposit savings is used up, the capacity to boost property-focussed savings will be curbed by cost of living pressures," said Hughes.

“In addition,  affordability and buyer sentiment are both likely to be adversely impacted by looming ECB rate increases as well as increased economic uncertainty.  As a result, we continue to see a bumpy path towards notably lower Irish property price inflation through 2022,” said Hughes.

Trevor Grant, chair of the Association of Irish Mortgage Advisors, expects strong growth witnessed in the past few months to "slow as the year progresses" due to new supply, growing difficulty in securing mortgage exceptions, and rising European Central Bank (ECB) interest rates.

"It’s hard to predict what impact the oncoming ECB rate increases will have on house prices here in Ireland in 2022 and into 2023 given the existing housing shortage and strong mortgage approval figures," Grant said.

"Those who already own their own home and have a mortgage on it, should be looking at the historical increase in the value of their homes as an opportunity to switch mortgage products and/or provider for a better rate.

"Switching to a lower fixed rate will make financial sense for tens of thousands of homeowners across the country. While we would advise that all mortgage holders review their options – this is particularly true for those on variable rates and fixed rates with less than three years remaining."

Rachel McGovern, director of financial services at Brokers Ireland, agreed that it was difficult to see the current rate of growth being maintained over the remainder of the year with the looming increases in interest rates.

She added that the situation was worrying for a "forgotten generation" of aspiring buyers, describing the market as "not sustainable" and that the dearth of affordable housing provided by the state was "an indictment of all policymakers".

A total of 3,920 dwellings were purchased in March at a combined value of €1.3bn, with existing homes accounting for 84% of transactions.

First-time buyers made up a third of purchasers, with 15,065 households securing their first property in March.

The median average price paid for a home was €285,000, rising to €410,000 in Dublin and €601,000 in Dún Laoghaire-Rathdown. Wicklow (€390,000) and Kildare (€345,000) were the most expensive counties outside the capital, while the cheapest was Longford (€136,500).

The mean average price was €333,300 nationally, €513,000 in Dublin, and €174,400 in the border region, dropping to €150,800 in Longford.

(Pic: Getty Images)