House prices may have peaked but are still at “unaffordable prices” that prospective buyers could struggle to meet, a housing expert has said.
At the weekly Fine Gael parliamentary party meeting on Wednesday night, TDs and Senators were briefed by party leader and Taoiseach Leo Varadkar on measures announced by the Government on Tuesday.
Sources said that he praised the progress that the Government had made on housing so far.
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He claimed that the country “is now experiencing the highest draw down on first time mortgages since 2005”. He suggested that was due to increased supply, the Help to Buy scheme and the First Home Scheme.
The meeting heard that house prices in Ireland have “almost certainly peaked and the average house price is expected to fall this year”.
Figures published by the Central Statistics Office (CSO) show that house prices fell slightly in January and February.
In the year to February, prices rose 5% on average, down from 6.1% the previous month. This was down from 7.7% in December and from a high of 15.1% in February and March 2022.
The median price across the country for a home in February was €305,000. However, this differed across different postcodes.
Dr Rory Hearne, an Assistant Professor at Maynooth University and the author of housing book ‘Gaffs’, told the Irish Mirror that house prices do appear to have peaked.
However, he pointed out that they are still at very high levels.
He said: “Very clearly, we’re seeing prices reduce in the rate of increase. In Dublin, there has been a fall in house prices over the last two or three months.
“We’re seeing a more significant fall in house prices in second-hand or existing dwellings. There definitely is a fall in [these] house prices.
“But new builds are not falling as much. They are likely to continue to increase somewhat, particularly in terms of the very significant demand that is still there and continued purchase of property by investors, which adds fuel and pressure on house prices.
“We definitely have reached the peak in house prices. They are likely to stabilise or fall further.
“The issue is that the demand is so big that they might keep house prices high or elevated.
“There are issues around access to mortgages or finance. The real issue is that house prices are unaffordable and they need to fall further and they need to be provided at a much lower price at affordable rates.”
Dr Hearne described the decision by the Government earlier this week to lift developers levies as “illogical”.
The Government has contended that while this could say the developer on average over €12,600 per unit, the primary motive of lifting the levies is to activate planning permissions.
This means that there will be no requirement for the developer to pass on the savings to those buying a home.
Mr Hearne added: “Developers will simply pocket money.
“What the Government should be doing is use the money it has to expand its affordable housing provision.”
Sinn Féin’s housing spokesperson Eoin Ó Broin, meanwhile, said that he believed that it is “not clear yet” whether house prices have peaked.
He explained: “The CSO releases real time Property Price Index figures and they are usually reflective of properties that were sold several months earlier.
“The most recent figures show that in the last 12 months, house prices have continued to increase.
“What they’re also showing is that over the last three to four months, there has either been a flatlining or, in some places, a dip in house prices.
“In my opinion, it is too early to say whether that is a trend. We have seen before that rents might flatline or dip for several months and then rise again.
“We need to keep an eye on the figures to see what happens.
“In some parts of the country, house prices are still rising and even if house prices hit a plateau, there is no indication of a drop or significant drop in prices.
“Plateauing isn’t a good news story. What we need to see is house prices come down and come down significantly.”
The comments at the Fine Gael parliamentary party meeting came just days after the Government announced a package of €1bn to speed up the delivery of homes.
This included removing developer levies for a year and providing subventions of up to €150,000 a unit to developers who deliver cost rental apartments.
Grants for vacant homes, meanwhile, were increased from €30,000 to €50,000, while the derelict homes grant was increased from €50,000 to €70,000.
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