Record shortage of houses for sale drives up property prices

The number of houses available to buy across Ireland is now at its lowest level in at least 17 years and is significantly less than half the pre-covid level, according to a new housing report.

That figure was 24% down on the number available in the first Daft Housing Report in 2007. Of the 10,500 houses available on March 1, approximately 9,700 were second-hand.

This total represented a new all-time low since the series began back in January 2007, Daft.ie said.

Housing prices nationally rose by 1.8pc in the first three months of the year, according to the latest Daft.ie report.

Author of the report, Trinity College associate professor in economics Ronan Lyons said in 207 months of data, there have only been four occasions when there have been fewer than 10,000 homes on the second-hand market. That was in February 2022 and each of the first three months of 2024. Between 2015-2019 there were 24,000 second-hand homes on the market at any one point.

"Overall, prices in the first quarter of 2024 are, on average, 5.8% higher than a year previously. This represents a more-than-doubling of the inflation in a year: this time last year, the annual change had fallen to just 2.7%, its lowest rate since 2020," Mr Lyons said. 

Between April 2020 and April 2021, during the pandemic, the number of second-hand homes for sale fell to just 11,600, but there was a recovery in 2022 when the number rose to over 16,000 by November that year.

"But the main factors driving the trends seen over the last few years ‐ and resuming in 2024 ‐ are an overall shortage, together with the impact of the Central Bank rules," Mr Lyons said.

He said last year saw a reversal in the trend which was “most likely driven by interest rate increases”. That trend has continued into 2024.

Mr Lyons said: “The new low in homes available to buy is driven by the second-hand segment and highlights the very tight conditions in that market across the country since covid-19.

“Interest-rate increases have affected the recovery of the second-hand market. If I already own a property and I fixed my rate in, say, 2021 until 2028, I could face a higher rate if I switch.”

He said interest rates are expected to level off and indeed maybe even fall later in the year. 

"As that happens, and as existing homeowners come off their fixed-rate mortgages, the supply situation ought to improve," he said.