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Navigating the Coming Year: Predictions for the 2024 Property Market

As we stand on the threshold of 2024, the Irish property market is poised for various potential shifts and changes. In this article, we’ll delve into current market trends, economic factors, and expert insights to make informed predictions about what lies ahead. Of course, nobody can know these things for certain, but we can simply offer you our unique perspective as Real Estate Agents working in this industry day-in, day-out.

Understanding the Current Landscape:

Contrary to what many of us believe, pricing in the Irish Real Estate Market is cooling rapidly. The average house price in Ireland rose by 1.1% between Q2 and Q3 in 2023, and by 3.7% year on year. Although this may seem like a sizable increase, it marks a sharp slowdown from the double digit rises we have seen over the previous few years. When adjusted for inflation, house prices actually declined 4.1% year-on year to July 2023.

Earlier in the year for the first 2 quarters, we saw a period of falling house prices, but this has come to an end in Q3 of 2023. Houses are now being sold at an average of 3% above the asking price across Ireland – showing that demand is far outweighing the supply.

Going against the trend of the rest of the country, Kildare was one of the only counties in Ireland to see a reduction in house prices by 2.7% to Q3 2023.

Economic Factors at Play

According to the latest EU Forecast for Economic Growth in Ireland from the 15th November 2023, things are expected to level out somewhat in 2024 after an intense period of Inflation during and after COVID. Following strong growth in 2022, our GDP is expected to grow by about 3% in 2024 (after a slight decline in 2023 of 0.9%).

Inflation is expected to level out at about 2.7% in 2024, following it’s peak of 8.1% in 2022. Our employment levels are at a record high and our unemployment rate now stands at 4.2%.

Government Policies and Regulations:

After heavy criticism on the state of the Irish housing crisis, Irish Government policy is now very much focused on boosting the supply of housing to meet the current market demands. In the 2024 budget, €1.9 billion will be spent next year on delivering 9,300 social homes, and €265 million will go to providing 6,400 affordable housing units. However, they have been heavily criticised over whether this will be enough to make a real difference in the housing crisis, and it is clear that significant changes are badly needed.

They have also increased rent tax credit to €750 for 2024 and are introducing new tax reliefs for mortgage holders. Three €150 tax credits have been introduced between the end of this year and April 2024, which should also contribute to lessening the blow for homeowners.

Interest Rates and Mortgage Dynamics:

The 10 successive interest rate hikes from the European Central Bank (ECB), the last of these coming in Q3 of 2023, will now bring interest rates for mortgage holders to a predicted rate of 4.5% for 2024, which are the highest rates we have seen in over a decade. This is sure to have a significant negative impact on anyone with or looking to take out a mortgage, and will be a factor that will have an effect on the demand for properties in 2024.

Demographic Shifts and Housing Preferences:

Government predictions around migration have been proven to be far underestimating the reality of the current situation. Original Housing projections accounted for a net migration figure of 220,000 in this decade, but this number has already been surpassed in the first 3 years – this is contributing hugely to the housing crisis. The rate of  building of homes needs to be seriously increased to meet this demand. Ireland’s housing stock per capita is now the lowest across a range of different European countries.

Conclusion and Recommendations

  1. Supply and Demand Dynamics:
    The continued lack of supply, with only 30,000 homes being built, may contribute to a tight market. Low supply and high demand generally put upward pressure on prices.
    The historical context of 2007, when 80,000 homes were being built, provides a benchmark for understanding the current construction pace. Understanding the contrast can help gauge potential market dynamics.

2. Price Trends:
High prices can be a double-edged sword. On one hand, they indicate a strong market and may benefit sellers. On the other hand, high prices can lead to affordability challenges for buyers, potentially slowing down the market.
The fact that prices have priced out many buyers suggests a potential ceiling for further price increases. However, it’s important to monitor how pricing dynamics evolve, as external factors can influence the market.

3. Market Stability:
If the market stabilizes, it may indicate a balancing act between supply and demand. Stability can be positive for both buyers and sellers, fostering a more predictable and sustainable market.
External factors, such as economic conditions, interest rates, and government policies, can impact market stability. Keep an eye on these factors for potential shifts in the real estate landscape.

4. Economic and Policy Considerations:
Monitor economic indicators such as employment rates, GDP growth, and inflation. A robust economy generally supports a healthy real estate market.
Keep abreast of any changes in government policies related to housing, construction, or mortgage regulations, as these can significantly influence the market.

5. Regional Variations:
Real estate markets can vary widely by region. Consider regional economic factors, job markets, and demographic trends that may affect housing demand and supply.

6. Interest Rates:
Changes in interest rates can impact affordability and influence housing demand. Monitor central bank policies and interest rate trends.

7. Potential Risks:
Be aware of potential risks such as a sudden economic downturn, global events, or unforeseen circumstances that could impact the real estate market.

In summary, our assessment of a continued lack of supply and high prices with potential stabilisation aligns with the broader trends observed in real estate markets. However, staying vigilant to economic, policy, and market-specific changes will be crucial for making accurate predictions. Always remember that real estate markets can be dynamic, and adjustments may be necessary based on evolving conditions. Do not hesitate to reach out for a chat with ourselves about any of this. We are here to help!

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