Property price increases in Ireland: Market trends and understanding the Residential Property Price Index
Ireland's property market has seen its fair share of ups and downs over the past twenty years. From rapid price increases to significant downturns and a recent surge, here's a look at the key moments that shaped the market.
Residential Property Price Index
The Residential Property Price Index (RPPI) is an important economic indicator that tracks changes in the prices of residential properties across Ireland. The data is collected by the Central Statistics Office (CSO) and provides insights into the trends in the housing market, showing whether property prices are rising or falling over time.
This makes the RPPI a valuable tool for homebuyers, sellers, policymakers, and economists to understand and analyse the real estate market.
How to understand the RPPI
A property price index graph shows how the prices of properties have changed over time. Here are the three key points to look at and how to understand them in simple terms:
- Time: Look at the bottom of the graph. This is the timeline, showing the months or years.
- Index numbers: On the left hand side of the graph, you'll see numbers. These numbers represent the price index. An index of 100 is usually the starting point or base value.
- Line: There will be a line that goes up and down across the graph. This shows how property prices have moved over time. If the line goes up, it means property prices are increasing. Whereas if the line goes down, it means property prices are decreasing.
The latest RPPI graph shows that now is a great time to sell in Ireland, as property prices are at their highest. Predictions suggest that this will continue to increase, however this is uncertain and depends on different factors.
How economic and social events impact property prices
Both economic and social events can have a significant impact on property prices, by either increasing or decreasing them. Here's a brief explanation:
Economic conditions
The overall health of an economy influences people's ability to buy homes. In a strong economy, with high employment and rising incomes, more people can afford to purchase properties, leading to increased demand and higher prices. Opposite to this, in a weak economy, with rising unemployment and lower incomes, demand for homes may decrease, causing prices to drop.
Interest rates
The cost of borrowing money to buy a home, influenced by interest rates, affects property affordability. Lower interest rates make mortgages cheaper, encouraging more people to buy homes and driving up prices. Higher interest rates have the opposite effect, making borrowing more expensive and potentially reducing demand.
Social changes
Shifts in how people live and work can affect the demand for certain types of properties. For example, changes in population size, urbanisation, or preferences for remote work can lead to higher demand in specific areas or for specific types of housing, influencing prices accordingly.
Government policies
Policies related to housing, such as tax incentives, subsidies, or regulations on property transactions, can influence the housing market. For instance, policies that make it easier for first-time buyers to purchase homes can increase demand, while regulations limiting foreign ownership might reduce it.
Overall, property prices are influenced by a combination of these factors, which can vary significantly depending on the specific circumstances at any given time.
Over the years: Ireland's property market
Since 2005, the Irish property market has experienced a boom, a significant crash during the global financial crisis, followed by a steady recovery and recent price surges.
The boom of the early 2000s
In the early 2000s, Ireland experienced a property boom. The economy was strong, and people were eager to buy homes, leading to skyrocketing prices. By 2007, just before the economic crash, the average house price in Ireland was nearly €310,000, with Dublin seeing the most significant increases.
The crash and recovery
The global financial crisis hit Ireland hard in 2008, causing property prices to drop sharply. Many people found their homes were worth much less than what they paid.
By 2013, the average house price had fallen by about 50% from its peak. However, as the economy slowly recovered, so did the housing market. By the late 2010s, prices were climbing again, although they were still not as high as before the crash.
Recent trends
In the last few years, property prices in Ireland have risen once more, reaching new highs. This increase is partly due to a shortage of homes, especially in cities like Dublin, where demand remains strong.
The COVID-19 pandemic briefly slowed the market, but prices quickly bounced back. Now, the average price of a house in Ireland is around €350,000, higher than the peak before the crash.
What's influencing prices now?
Several factors are driving the current property prices:
- Shortage of homes: There aren't enough new houses being built, especially in big cities, making existing homes more expensive.
- Strong economy: With more jobs and higher wages, people can afford to pay more for homes.
- Low interest rates: Cheaper loans have made buying houses more attractive.
- Government programs: Schemes like the Help-to-Buy program help first-time buyers, affecting demand and prices.
Many are keeping an eye on the property market to see if prices will continue to rise or start to level off. Factors like potential changes in interest rates and the overall health of the economy will play crucial roles in shaping the market's future.
A rich selling opportunity
As of 2024, it could be a good time to sell property in Ireland, given the high demand and rising prices as described above. With any property sale, it's advised to choose a good estate agent who knows your area and property type well to help you secure the property sale you're after.
As a general rule of thumb, it's always beneficial to consider several estate agents before choosing one. That way, you can ensure that you've chosen an agent you're comfortable with, and have the same goals in mind.
