The COVID-19 pandemic has had an unprecedented impact on the global economy, and the housing market has not been spared. Despite initial waves of panic, the housing market has actually seen an unexpected surge in prices, with high demand and low inventory driving up costs. However, as the pandemic continues and the world adjusts to new norms, many analysts wonder if this trend is sustainable. Could the housing market finally be hitting a breaking point, and are we likely to see a fall in house prices soon? In this article, we take a closer look at current housing market trends and what they might mean for the future.
The housing market in the State is experiencing a slowdown in price growth due to higher borrowing costs and inflationary pressures. According to Daft.ie’s latest housing market report, asking prices fell in the first quarter of 2023, marking the first such decrease in a decade. Although still up 2.7% from the same period last year, asking prices across the State were down 0.3%, with Dublin experiencing a 0.4% drop. This information is supported by the Central Statistics Office’s Residential Property Price Index, which shows a monthly decline of 0.6% in January, resulting in an annual inflation rate of 6.1%. While the property markets around the world have gone into reverse due to central banks’ aggressive interest rate hikes, the positive house price inflation here is attributed to strong population growth, chronic undersupply, and the more muted pass-through of higher interest rates by banks. On the other hand, some suggest that higher interest rates will eventually lead to a reversal, and falling prices later this year, as strain on affordability outweighs the current demand-supply dynamic.
In summary, after a pandemic surge, are house prices finally going to fall? While it’s difficult to predict the future of the housing market with certainty, it seems that certain indicators point towards a potential decrease in the near future. Low mortgage rates and high demand for homes have been driving up prices, but as the economy recovers and interest rates begin to rise, it’s likely that the demand will decrease and prices will adjust accordingly. However, this doesn’t necessarily mean that prospective homebuyers should hold off on purchasing a home. Each market is unique, and there are many factors that could impact the direction of housing prices. Ultimately, it’s important to do your research and work with a trusted real estate professional to make an informed decision.
