Findings of the latest Myhome.ie survey
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What is the main topic discussed in this episode?
Breakfast Business with Enterprise Ireland on Newstalk.
What recent trends are observed in Irish house prices?
Irish house prices rose nationwide by around 8% last year amid rising real wages and very limited supply of homes. Now, the latest MyHome.ie survey says that asking prices have moderated slightly and have risen by 5.7%. But affordability is becoming a major issue with the average price of a property coming in at eight times the average salary.
How is affordability affecting the housing market in Ireland?
And shockingly, a fifth of properties are now selling for 20% above the asking price. Conal McQuilla compiles the myhome.ie house price survey and is sitting in front of me. Good morning, Conal. Good morning.
What does the latest MyHome.ie survey reveal about asking prices?
So, still a very robust housing market. So, rumours of a collapse or correction have been greatly exaggerated.
How do current house prices compare to average salaries?
Well, I think the news this morning that asking for inflation is moderated to 5.7%, which is its slowest pace in two years, should be welcomed. You know, it shows that the kind of high single digit rates of inflation we've seen over the past two years are finally starting to moderate. Housing is clearly very expensive. So, look, it's not the solution to the issue, but at least... we're now beginning to see house price increases more in line with wage growth, which is running around 5%. So I often hear people say, you know, our house price is going to fall back. I suppose people are, their memories are kind of coloured a little bit by the global financial crisis and what happened here in 2007, 2008.
What factors are contributing to the current housing market dynamics?
But actually house prices very rarely fall in nominal terms. What we do see is a period of time where hopefully prices increase at a slower pace than wages.
How are buyers responding to asking prices in the market?
And that means a sort of a gradual improvement in affordability. So when we look at affordability, It's clearly deteriorated over the past two years. Now we're seeing house prices increase closer in line with wage growth. So that deterioration in affordability is levelling off.
What implications do recent budget changes have on housing prices?
Eight times average salary.
That's the average house pricing. On average, it's eight times. The average salary is €53,000 on an annualised basis. That includes part-time workers. So that multiple would be slightly lower for a full-time salary. It's the most stretched that ratio has been since 2009.
And we know what happened in 2009.
We do. But if you look at the mortgage market, people are not taking out the kind of multiples of their income that we saw in 2007, 2008. This is really just because the housing market is illiquid. There's lack of properties. If you look at, say, rented yields of, say, 5%, roughly on average across the country, there's still well in excess of interest rates of 3% to 4% on mortgages. So it still makes more sense to buy than to rent. So look, it's a difficult market, but at least the kind of pace of price increases is slowing.
And a fifth of homes are selling for more than 20% above asking price. So if your asking price is 500,000, it'll eventually sell for 600,000.
Well, in that particular instance, yes. And I think it does reflect home buyers competing against each other, bidding up the price. But I think we do have an issue in the Irish housing market, which is that asking prices have not been set at a realistic level. If you look at the UK, typically the asking price is set and you see a small discount in good times and bad when the housing market in the UK is hot or cold. And the UK housing market has got substantially more transactions amongst existing homeowners. Chains are a feature of the UK housing market. It clearly seems to be a less fraught, traumatic process for people in the UK to move home. What we really see in the Irish market is that first time buyers are very buoyant.
Clearly they're very keen to get on the ladder. But people who have homes are very, very reluctant to move. That's interesting. Why is that? Well, I think if you look at the housing market, it's clearly not acting as well as it might do. Part of that is maybe the conveyancing process. Part of that is the lack of chains. And also part of it is that we see these asking prices which aren't representative of the final price. You know, I think when a fifth of transactions are going 20% above the original asking price, you know, I think people can do better.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:01–0:08
2
What recent trends are observed in Irish house prices?
0:08–0:32
3
How is affordability affecting the housing market in Ireland?
0:32–0:43
4
What does the latest MyHome.ie survey reveal about asking prices?
0:43–0:51
5
How do current house prices compare to average salaries?
0:51–1:25
6
What factors are contributing to the current housing market dynamics?
1:25–1:33
7
How are buyers responding to asking prices in the market?
1:33–1:48
8
What implications do recent budget changes have on housing prices?
1:48–7:47