Housing Market

What Now for the Housing market ?

Housing Market Update : The ECB will increase its interest rate by 0.50% in two weeks time meaning trackers (and most likely variable rate) mortgage holders will be hit again. This is not likely to be the last increase either. We are sticking to our believe that the main Banks mortgage rates will be over 5% this summer. Inflation is higher than expected, the jobs market is stronger and house prices continue to rise. All a formula for higher property prices.

1.     House Prices :

Still continuing to increase.

The CSO figures show that house prices increased by 8% in 2022. Sherry Fitz reported that there were ~15k second hand homes available to buy nationwide in February. Down 26% since Covid and down from 54k from 2010 ! The supply issue seems to be getting continually worse and with no end in sight on this front it points to prices continuing to grow. It must be remembered that the change in Central Bank rules in Jan 2023 is having at least an offsetting effect Vs higher interest rates.

2.     Economy / Housing Demand :

Remains very strong.

In 2022 €15.9 billion of mortgages were approved, an increase of 18% on 2021. The completion or drawdown of mortgages also continues to grow year over year. With new properties completed expected to fall in 2023 and so many mortgage approvals still “active” this again points to continued upward pressure on prices. The unemployment rate fell to 4.3% from 4.4% showing the continued strength of the labour market and further underpinning our assumption for the housing market to continue to increase in 2023. The cost of construction is STILL increasing year on year which will make many apartments unviable and pushes up the price of new homes.

Key winners in the current housing market

We have seen the major builders, Cairn and Glenveagh, report increased cost and prices per home in 2022 and this is forecast to continue in 2023. Inflation also INCREASED in February despite many predictions of a decrease. This is hard to see anytime soon as governments (or giverments if you like) continue to pump inflation into the market with cash hand outs – this will actually make the cost of living increase !

So, are there any factors that might push house prices down ? Interest rates seem to be the only anchor at present, and they won’t really begin to fully impact until early summer. The housing market will remain hot.

3.     What’s next for the housing market?

More rate increases – expect a significant increase from Bank of Ireland in the coming month or so. If you are with them now – even on a fixed rate, you should be looking at all your options. With the ECB rate increase due to come into effect on March 16th – within potentially 2 weeks the major banks will have increased variable and most of their fixed rates too.  Tracker rates will  be over 5% for some people. And they won’t stop there. The major assumption we see from customers is that they think – somehow – interest rates are going to start falling soon. We believe this is dead wrong and is going to cost a lot of people a lot of money waiting for something that never happens.

If you would like to contact us to run through your current situation and get the best advice for you please do not hesitate to contact us. A five minute call could save you over €10,000 !!! Alterbativey if you want to get more information (or provide us your opinion) on the housing market please do get in touch

Rate Predictor – can you beat us ??

AIB  average mortgage rate July 2023 :   5.25%

Inflation in Ireland  in July 2023 :  6.6%

Housing Market YoY Growth July 2023 : 5.1%

If you would like an initial consultation to assess how much you can borrow/save and what your monthly repayments will be please do get in touch with us at info@pangeamortgages.com or call 01-4425064 // 085-8600728

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