The housing market is always a topic of interest, and as we head into 2023, property experts have made their predictions. While uncertainties and challenges persist, there are reasons to be optimistic about the year ahead. Let's take a closer look at what the experts have to say.
Robust Market with Moderating Price Growth
Orla McMorrow, the deputy chief executive at DNG Group, believes that the housing market will remain robust in 2023. However, she expects the rate of price growth to moderate both in Dublin and nationwide. McMorrow predicts low single-digit house price growth for the year ahead. Despite the headwinds of rising interest rates and inflation, the Irish economy is well-equipped to handle these challenges. While a slowdown in price appreciation is expected, the market is still expected to perform well.
DNG deputy chief executive Orla McMorrow says the company expects the number of residential transactions in 2023 will exceed 2022 levels by 5-7 per cent
Strong Owner-Occupier Market and Increasing Demand for New Homes
According to David Cantwell, director at Hooke & MacDonald, the owner-occupier market is expected to remain strong in 2023. He predicts that first-time buyers will be particularly active in the spring, taking advantage of the new mortgage rules. With the changing working environment, people are now more willing to travel further in search of good-quality houses.
There will also be a significant number of second-hand rental properties entering the market as small investors exit due to tax issues and increasing regulation. Rising energy costs will also lead more people to choose newly-built homes with good energy ratings, resulting in cost savings. However, despite the demand, there continues to be a shortage of supply to meet the rising population.
Hooke & MacDonald director David Cantwell says there will continue to be insufficient supply to meet demand due to the rising population
The Need for Bold Policy Responses and Uncertainty Ahead
Marian Finnegan, managing director at Sherry FitzGerald, reflects on the challenges of the past two years and the impact of uncertainty on the housing market. While demand for properties remained robust in 2022, Finnegan highlights the impact of uncertainty on construction, leading to a significant supply deficit. She expects transaction volumes to exceed 60,000 in 2023, with particular activity in rural and coastal areas. However, she also emphasizes the ongoing accommodation crisis and the urgent need for bold policy responses to address the supply deficit.
Marian Finnegan of Sherry FitzGerald: 'If I had one wish for 2023, it would be a bold policy response to address the supply deficit'
A Balanced Market and Changing Buyer Behavior
Stephen Day, senior director of residential sales at Lisney Sotheby’s International Realty, highlights the changing dynamics in the housing market. The market, which was once dominated by sellers, has shifted towards a balance between buyers and sellers. Buyers have become more price sensitive, and there is a hint of uncertainty in the air, driven by factors such as interest rate hikes. Dublin has seen an increase in the number of properties for sale, with landlords exiting the market. However, there is also a significant number of significant off-market transactions, often involving international buyers.
Stephen Day of Lisney Sotheby’s International Realty: 'With further interest rate hikes expected and buyers’ enthusiasm starting to cool, we don't expect to see a bounce in 2023'
Government Policy and Supply Challenges
Pat Davitt, chief executive at the Institute of Professional Auctioneers and Valuers, discusses the growth of the property market in the past year and the challenges ahead. While the past year saw growth in prices and new property builds, Davitt expects a flat first six months in 2023. He attributes this to factors such as rising government taxes, planning costs, and the lack of coordination among various bodies and agencies. Davitt highlights the urgent need for a unified approach to address the supply deficit and build more affordable homes.
IPAV chief executive Pat Davitt: 'I see a flat first six months with less activity in the new-homes market, especially apartments'
Increasing Demand for New Builds and Supply Challenges
Guy Craigie, director of residential property at Knight Frank, focuses on the trends witnessed in the residential property market. There has been a significant increase in cash purchases, particularly for prime properties, driven by successful business sales, high-net-worth individuals, and Irish people returning from abroad. Demand for city-center properties has also risen as people return to the office, seeking shorter commutes and a certain lifestyle. The preference for energy-efficient new builds has increased due to the rising costs of renovation and energy awareness. However, the planning system's challenges continue to contribute to the lack of supply.
Guy Craigie of Knight Frank: 'Ongoing challenges with the planning system mean the lack of supply will continue indefinitely'
Strength of the New-Homes Market and Government Initiatives
David Browne, director of new homes at Savills Ireland, points out several factors that will support the new-homes market in 2023. The loosening of Central Bank rules and the introduction of government initiatives, such as the first-home scheme and increased borrowing limits for first-time and subsequent buyers, are expected to drive demand for new homes. With soaring rental costs, more people are likely to opt for mortgage payments, making new homes attractive. Browne also highlights the ongoing challenges in renovating older properties and the increasing preference for energy-efficient new builds.
David Browne, director of new homes at Savills: 'As affordability is restricted, the demand for apartments, duplexes and townhouses will likely increase'
A Market of Two Halves and the Need for Government Support
Joanne Geary, managing director at MyHome.ie, reflects on the residential property market in the past year. The market saw runaway asking price inflation in the first half of the year, which then cooled down in the second half due to rising interest rates and cost-of-living concerns. While supply has improved, with more properties available for sale, price drops and reduced time on the market indicate a slowdown in asking-price inflation. Geary emphasizes the need for government support and increased construction activity to address the supply deficit in all sectors of the market.
MyHome.ie managing director Joanne Geary: 'We expect to see a further slowdown in asking-price inflation'
Uncertainties and Challenges Ahead
Shirley Coulter, chief executive of the Society of Chartered Surveyors Ireland (SCSI), highlights the factors likely to dominate the Irish property landscape in the coming year. Additional interest rate hikes, the continued exodus of private landlords from the rental market, and a shift away from property by institutional investors are expected to stabilize prices with low single-digit increases. Well-presented houses in good condition and energy-efficient homes will continue to perform well in the market. However, with the potential shortage of supply for both rent and sale, there is still work to be done to meet the Government's housing targets.
SCSI chief executive Shirley Coulter: 'Landlords look set to exit the market in increasing numbers, especially when the eviction ban is lifted'
As we embark on a new year, the housing market in 2023 is expected to face both challenges and opportunities. The predictions from property experts indicate a moderation in price growth, increasing demand for new homes, and the urgent need for policy responses to address the supply deficit. It's essential to keep an eye on these trends as they shape the future of the housing market.
