Sherry FitzGerald, Ireland’s largest estate agent, says that the rate of house price growth is exhibiting signs of moderation.

According to the Sherry FitzGerald House Price Barometer, the average value of second-hand homes in Ireland increased by 1.6% in the second quarter of 2022, the slowest rate of quarterly growth in over a year.  

The estate agent's house price index model reflects achieved prices which results in a differential when compared to other industry commentators using data sources such as vendor expectations, asking prices, average values etc.

The company measured property value growth of 4.5% during the first six months of 2022, matching the rate recorded in the first half of 2021, while average values increased 9.6% in the 12 months to June 2022.

Prices in Dublin rose 1.5% quarter-on-quarter and 8.5% year-on-year, while outside of Dublin quarterly inflation measured 1.8% and annual inflation was 11%.

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"There are definitive signs now of a cooling in the rate of price growth in the national housing market. Although still strong, the frenzied level of bidding activity observed in the recent past has eased off," said managing director Marian Finnegan.

"Internationally, many markets are similarly noting an alleviation in the rapid appreciation in values which had characterised 2021. 

"While still insufficient, recent incremental improvements in supply have helped taper house price growth. With both the uptick in construction activity and the volume of second-hand listings coming to the market contributing to this. The rate of inflation should continue to ease as the year progresses due to continued gradual improvements in supply and the forthcoming interest rate rises from the ECB.

"However, continued albeit more subdued price growth is expected in Ireland in the near term given the seismic mismatch between supply and demand."

Investors have accounted for 12% of property purchases year to date, and of all vendors of second-hand homes with Sherry FitzGerald in the second quarter, 37% were investors selling their properties, one of the highest proportions on record since 2003.

"While there is growing evidence of housing market imbalances in many developed countries, there is no doubt that the accommodation crisis in Ireland is more deep-rooted than most," Finnegan added.

"This is perhaps further highlighted by the recent release of the preliminary figures for the 2022 Census, which underscores the scale of the housing crisis. 

"This data highlights the need to build over 50,000 new homes each year until 2036, if we are to even bring Ireland in line with the European average in household size. This is more than twice as many as we are currently building.   

"Furthermore, the rental crisis lies at the core of this accommodation crisis. This is particularly wearisome because unlike the complex nature of the overall market, there are many well documented solutions to the rental crisis which have been disregarded by policy makers for over a decade. The time for action on this debacle is now.” 

A total of 12,200 housing transactions were recorded were recorded on the Property Price Register in the first quarter of 2022, the largest number of Q1 deals for over a decade. A total of 1,600 new homes were sold between January and March, up 8% from Q1 2021 but down 3% on the same period of 2020.

Sherry Fitz said new home sales remain "particularly sluggish" in Dublin, sinking to their lowest Q1 level since 2015, but outside the capital sales rose 12% on an annual basis.

In the second-hand market, a total of 10,600 sales were recorded in the first three months of 2022, a 0.2% increase from the same period of 2021 but still the strongest Q1 since 2010.

(Pic: Getty Images)