Smart Money: Are Irish house prices following other European countries downwards?
In the context, ESRI research professor Kieran McQuinn, says that the recent easing down in prices does not come as a surprise, particularly in the context of higher interest rates which are bound to have some impact on demand.
The second is the ongoing shortage of housing supply. The ESRI previously estimated that 30,000 to 35,000 houses a year would need to come on stream to satisfy demand – with population projections being increased, McQuinn says the institute is set to increase this estimate later this year in work it is doing for the Department of Housing. This structural shortage of supply is set to put a floor on prices, he believes.
Higher construction costs are pushing up new home prices, O’Leary says, while demand is supported by Government incentives. For now, in this part of the market, prices continue to rise despite higher interest rates and activity levels remain strong. New homes sales in March were 12 per cent ahead of the previous year, though down in Dublin itself – presumably due to a lack of supply.
Further afield, it is a similar story as higher borrowing costs take a toll. In some cities in Australia for example, notably Sydney, house prices had surged ahead and are in the middle of a significant correction under the weight of higher interest rates. Similar trends are evident in New Zealand, where Auckland is in the middle of a major correction.
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