A flood of landlord-owned homes coming to market is helping to cool house price inflation in some parts of the country, with almost a third of all homes for sale in certain areas now accounted for by landlords exiting real estate or reducing their holdings.
But elsewhere, shortage-induced inflation continues to hike house prices at rates akin to those experienced in the Celtic Tiger era.
The price of a three-bedroomed semi-detached house across the country rose by 2.9pc over the past three months to €286,611 – or almost 1pc per month, representing an annual increase of 13pc.
Up to 30pc of houses for sale in many parts of Dublin are now due to landlords selling, with knock-on effects for the rental market, the latest Irish Independent /Real Estate Alliance (REA) Average House Price Index survey found.
But despite the cooling in the rate of increase, inflation continues at significant rates, with the price of the average three-bed semi-detached home now pushing up towards the €500,000 mark in the capital.
At the same time, coming hikes in interest rates and a worsening economic outlook are also expected to add to a cooling in the rate of inflation in the months ahead.
The second quarter data published today shows that sale prices (as opposed to asking prices) in Dublin postcode districts for the most common three-bed family home type have risen by 2.5pc in the past three months, to an average of €493,333. The annual rate of increase has dropped two percentage points to 8pc on the previous survey.
But in North County Dublin areas such as Swords, Skerries and Balbriggan, prices have risen by treble that amount to 22pc annually, as Dubliners scramble to find a home they can afford in the cheapest parts of their county.
Price is now the determining factor as city-born buyers chase properties in counties such as Longford and Laois, often leapfrogging the traditional commuter counties around Dublin.
Six in 10 of all buyers in Longford are from outside the county, the survey found, with first-time buyers making up half of all sales in a market with an average house price of €152,000, according to local agent REA Brady.
In Laois, 40pc of buyers are now from outside the county, where the average price is €240,000 – and 85pc of purchasers are first-timers.
“We are seeing a sweet spot of around €410,000 at which second-hand homes are coming to the market in greater numbers in areas like my own in Lucan and Bray in Co Wicklow,” said REA spokesperson Barry McDonald.
“This is taking the urgency out of the market in these locations, as buyers feel that they have some options. However, this easing is only being seen in areas where there are new homes.
“Elsewhere supply remains a major issue. Interest rate rises and inflation fears are giving buyers some pause for thought but neither of these issues can temper the pent-up demand of mortgage approved buyers.
“The biggest factor on the market in the last quarter is the increasing proportion of sales from private landlords.”
These are private individuals (as opposed to funds) who mostly bought a small number of homes as an investment, many instead of a pension. However, high taxation rates on rents with increasing restrictions are causing them concern, particularly in comparison to funds whose rents are not capped and which operate in a favourable tax regime.
One Dublin agent warned of the knock-on effect on the country’s workforce of the shrinking rental market as 30pc of his vendors are now private landlords selling up.
“As a result, we have people leaving the country because they cannot find accommodation when their landlord decides to sell, and this will affect the available workforce in the long-term,” said Anthony McGee, REA McGee Tallaght.
The highest segment increase in Q2 was in cities outside the capital, which saw a 3.3pc rise to an average selling price of €298,750.
Prices in Limerick rose by 4pc to €260,000, with Waterford up by 2pc to €270,000 and Cork increasing by a steady 1.5pc to €345,000.
The majority of Galway city’s 8pc annual increase has come in the past three months with prices rising by 6pc to €320,000.
Agents REA McGreal Burke had a very busy quarter, with asking prices exceeded due to lack of supply.
However, with prices getting back towards 2007 levels it is anticipated that more properties will come to market to ease demand.
Galway agents are also seeing strong demand from buyers from the city moving to towns around the county, such as Loughrea, for more choice and value.
“Working from home has facilitated many buyers to look at regional towns as an option,” said Kevin Burke of REA McGreal Burke.
Commuter counties saw prices increase by 2.3pc – a jump of €6,833 to €311,833.
The biggest rise was in Louth, which rose 5pc in the quarter, with prices relatively more affordable than the capital at €265,000 and 50pc of buyers coming from outside the county.
In the rest of the country, where prices rose 3.2pc to €202,897, the survey found that one in every three buyers were from outside the county, with 50pc of them first-time purchasers, as new working conditions enable a rethink on home bases.
The Irish Independent REA Average House Price Survey focuses on the actual sale price of Ireland’s typical stock home, the three-bed semi, giving an accurate picture of the second-hand market in towns and cities countrywide.