Our recent Residential Property Report found that the Irish property market is continuing to adapt in varying ways. While the analysis showed promising results in the increase in construction to 2% YoY, there was other findings that showed least favourable with the lowest figure in residential vacancy dropping to 3.9% in June 2023. In this blog, we highlight the main trends found in the report and which counties are experiencing the most market pressure.
Detached dwellings remain the most prevalent but apartment numbers increasing
There were 2,115,361 residential dwellings in Ireland in Q2 2023, according to the GeoDirectory database. As in previous years, detached dwellings (30.7%) accounted for the largest share of the total, followed by terraced dwellings (28.3%), and semi-detached (24.7%). The number of apartments, which are defined as dwellings which exist in a building of five or more dwellings, amounted to 214,605 (10.1% of the national stock). This total represents an increase of 8,473 units (4.1%) compared to the corresponding figure for Q2 2022.
A total of 26,796 new residential addresses were added to our database in the year to Q2 2023, comprising 1.3% of the total residential stock. Dublin (32.9%) continues to account for the largest share of new units added in the year to Q2 2023, with over half (53.3%) of new dwellings added within the Greater Dublin Area.
The number of buildings under construction grew by 2.0% year-on-year
The number of buildings under construction continues to increase, with a total of 22,842 buildings under construction in Q2 2023. This represents an increase of 452 buildings (+2.0%) relative to the corresponding figure for Q2 2022. Construction activity remained strongest in Leinster, which accounted for 62.9% of all buildings under construction in Q2 2023.
The Department of Housing, Local Government & Heritage (DHLGH) reported a total of 28,369 units commenced in the twelve months to June 2023. Comparing commencements in Q2 2023 to the corresponding quarter last year shows an increase of 14.8% from 7,152 to 8,212 units. The trend in the first six months shows a total of 15,561 commencements which represents an increase of 10.0% on the corresponding period of 2022. This is a positive trend which can be expected to support the delivery of the Housing for All this year.
In terms of housing supply, the latest Central Statistics Office (CSO) release on New Dwelling Completions Q1 2023 reported that the total number of new dwellings completed in the four quarters to Q1 2023 was 30,898, up 39.0% on the corresponding period to Q1 2022. The delivery of apartments continues to increase, with a total of 9,853 apartments completed in the four quarters to Q1 2023 (31.9% of the total).
Number of vacant dwellings continues to decrease
In this quarter, our database classified 81,712 dwellings as vacant. This figure is down 5.8% (or 4,996 units) compared to the corresponding figure in Q2 2022. The average vacancy rate across the state was 3.9%, down 0.3 percentage points (ppts) relative to Q2 2022. Dublin recorded the lowest vacancy rate at 1.0%, while Leitrim recorded the highest vacancy rate at 12.2%, despite a YoY decline of 0.6 ppts.
Number of derelict address points falls
A total of 21,134 address points were classified as derelict in Q2 2023, down 3.5% from Q2 2022. Connaught had the highest proportion of derelict address points, with 37.1% of the national total. At a county level, dereliction levels were highest in May (13.5% of the national total), Donegal (11.8%) and Galway (8.8%). In contrast, the Greater Dublin Area (GDA) accounted for 5.1% or 1,101 units of the total derelict address points in Q2 2023.
Average house prices increased in all 26 counties in the 12 months to May 2023
The national average house price over the 12 months to May 2023 was €366,291, after an 8.2% YoY increase compared to the 12 months to May 2022. Across the 26 counties, the highest YoY increases in average house prices were found in Donegal (+17.7%), Mayo (+15.4%), and Monaghan (15.2%).
Average house prices increased in all 26 counties in the 12 months to May 2023 continued The four counties that make up the Greater Dublin Area had some of the highest average house prices in the 12 months to May 2023, with Dublin having the highest price at €538,168 followed by Wicklow at €470,779. The Greater Dublin Area also saw the highest percentage of new dwelling sales across the 26 counties, with 45.2% of total transaction to May 2023 being new dwellings in Kildare, followed by Meath at 35.5%.
Furthermore, of the top 10 principal post towns, which accounted for 41.5% of new property purchases, seven of the 10 towns were within the Greater Dublin Area. Conversely, counties in the west of the country saw some of the lowest shares of new property transactions, with only 2.4% of total transactions comprising new dwellings in Leitrim and 6.0% in Roscommon. The four principal post towns where new-build property transactions were greatest were all located within commuting distance of Dublin, indicating a high concentration of new dwellings being delivered in the GDA when compared to the rest of the country. This may be because GDA remains and is increasingly the most popular place to live according to the 2022 Census, and therefore requires a higher level of supply of new dwellings when compared to the rest of the country.
Average rent in new tenancies continues to increase year-on-year
According to the Q4 2022 RTB Rent Index, standardised average rent in new tenancies saw a YoY increase of 7.2% in Q4 2022 when compared to Q4 2021. The Daft.ie 2023 Rental Price Report provides more recent data on market rents, reporting a 11.7% YoY increase in national average listed rents. Both the RTB Rent Index and the Daft.ie report Dublin as continuing to have the highest rents in the country, with RTB reporting Dún Laoghaire-Rathdown with the highest standardised average rent at €2,381 and Daft.ie reporting Dublin South County with the highest average rent of €2,856.
With both rents and house prices continuing to increase, understanding household affordability is important for potential first-time buyers. Our report examines multiple ways of assessing affordability for first time buyers looking to purchase a home. The first form of analysis is to understand the age-old question - to buy or to rent? To compare monthly rent payments versus monthly mortgage repayments, the report firstly calculates monthly mortgage repayments assuming a 90% loan-to-value ratio, a 30-year term with a 3.75% mortgage interest rate. This monthly repayment is then compared to the Q4 2022 RTB rent index figures for average standardised rent in new tenancies for each local authority. The analysis assumes the purchaser has the required 10% deposit to purchase the home. Mortgage repayments will be sensitive to the mortgage rate which currently reflects the upward trend in mortgage rates over recent months.
For a first-time buyer looking to purchase a new dwelling, the analysis finds that it is cheaper for that first time buyer to rent a home than to purchase a new home in 27 out of 31 local authorities. First time buyers save the most by renting instead of purchasing a new dwelling in Westmeath, saving €426 per month. On the other hand, first time buyers looking to purchase a new home in South Dublin, Fingal, Longford and Carlow save more money per month if they purchase a new dwelling rather than rent.
While the affordability for new dwellings is more challenging for first time buyers, the existing dwelling market is more favourable. It is considered more affordable for a first-time buyer to purchase an existing dwelling rather than rent a home in 30 out of 31 local authorities. First time buyers in Dublin see the most savings, with first time buyers in Fingal saving €557 per month for a mortgage versus renting. This is followed by South Dublin, where first time buyers will save €545 per month and Dublin City, where savings amount to €365 per month. In terms of answering the question to buy or to rent, purchasing a new dwelling is more challenging for first time buyers compared to purchasing an existing dwelling.
To learn more about the report findings and the analysis, download the report by completing the form below.
Posted: 17/08/2023 12:00:00