The median asking price for a home in Ireland now stands at €365,000, reflecting a 0.8% increase from the previous quarter. The rise in prices is more pronounced outside the capital, where prices have surged by 8.5% over the year, bringing the median asking price to €315,000. In Dublin, the annual increase was 6.2%, with the median price reaching €455,000.

Several factors contribute to this upward trend. One significant driver is the limited supply of homes. As of September, there were 13,100 homes listed on MyHome.ie, a figure significantly lower than pre-pandemic levels. This shortage is exacerbated by the reluctance of potential sellers who fear they might not secure a new property after selling their current one.

Economic factors also play a role. The relaxation of Central Bank mortgage lending rules for first-time buyers has increased the share of first-time buyers with higher loan-to-income ratios. Additionally, average earnings have risen, which has helped drive up mortgage approval values.

In Waterford, house prices have seen a substantial increase. In Waterford City, prices in the third quarter of 2024 were 3% higher than a year previously, with the average price of a home now at €250,000. In the rest of Waterford, prices rose by 8% over the same period, with the average price reaching €348,000.

The overall housing market in Ireland remains under pressure due to the country’s population growth, which has been 1.9% for the second consecutive year. To match the UK’s housing-to-population ratio, Ireland would need to build an additional 206,000 homes.

Despite the challenges, there are some positive signs. New housing starts have risen to 49,000 in the year to July, and MyHome.ie expects completions to increase sharply next year to above 40,000 units. However, the impact of build cost inflation and elevated energy costs remains a concern.

In addition to these factors, the report highlights that one in seven properties are now selling for 20% over the asking price, indicating a highly competitive market. This trend is particularly evident in Dublin, where the demand for housing continues to outstrip supply.

The report also notes that the average time to sale agreed was just 12 weeks in the third quarter, close to a historic low. This rapid turnover is a clear sign of the high demand and limited supply in the market.

Conall MacCoille, Chief Economist at Bank of Ireland, commented on the situation, stating that the rising population and economic growth are reminiscent of the Celtic Tiger era. He emphasised the need for a significant increase in housing supply to meet the growing demand.

Joanne Geary, Managing Director of MyHome.ie, expressed optimism about the future, noting that the increase in housing starts and expected completions are positive signs. However, she also stressed the importance of sustained efforts to address the imbalance in the market.

The Irish housing market is experiencing significant price increases driven by limited supply, economic factors, and population growth. While there are efforts to increase housing supply, the market remains tight, and prices are expected to continue rising in the near term.

The bank is reducing its five-year green mortgage rate by 0.25 percentage points, bringing it down to 3.2% for properties with a Building Energy Rating (BER) of B3 or higher. Additionally, AIB is cutting its four-year fixed rate for mortgages of €250,000 and above by 0.25 points, making it available from 3.7%. These new rates will be available to both new and existing customers starting tomorrow.

AIB’s Managing Director of Retail Banking, Geraldine Casey, emphasised the importance of offering a variety of choices, value, and convenience for customers seeking to buy their new home. She noted that this latest cut aligns with AIB’s strategy to support customers in making more sustainable choices.

The rate reductions come in the wake of the European Central Bank’s (ECB) recent decision to lower its key lending rates for the second time this year. This has prompted other lenders, including Bank of Ireland, PTSB, and Avant Money, to also reduce their rates.

Broker Michael Dowling of Dowling Financial welcomed the rate cuts, highlighting that the reduction on AIB’s green rate will save borrowers approximately €13 a month for every €100,000 borrowed. AIB has also extended its approval in principle period from six to 12 months, giving customers more time to find and buy their new home.

The latest cuts are part of AIB’s broader strategy to remain competitive in the market. Martina Hennessy, Managing Director of broker Doddl.ie, pointed out that AIB’s non-green rate offerings had become higher than those of competitors, prompting the bank to make these reductions. She added that the cuts could save customers around €500 a year.

AIB’s latest rate cuts are seen as a positive development for the mortgage market, potentially leading to further reductions from other lenders and providing significant savings for borrowers.