The property market is about to peak and the recent booming rate of price rises will begin to ease, experts predict.
Prices have surged by 15.2pc in the year to March, but the monthly increase of 0.6pc was down from January when prices were jumping by close to 1pc. In February the monthly rise was 0.7pc. If this trend is maintained it would mean the market is about to peak, something that could see house-price inflation easing later this year.
The latest property price rises come as ICS Mortgages increased its lending rates for the second time this year, with a rise of 1pc across all loan-to-value bands. Property prices are now just 2pc lower than the peak they achieved during the Celtic Tiger bubble in 2007.
In Dublin prices rose by 12.7pc in the year to March, and prices outside Dublin rose by 17.3pc.
The region outside of Dublin that saw the largest rise in house prices was along the Border, at 25pc.At the other end of the scale, house prices in the Mid-East increased by 15.2pc.Prices are surging outside of urban centres as the work-from-home option continues to draw people into rural areas.
But the national monthly increase was 0.6pc, down on the rate of rise in previous months. Economist with KBC Bank Austin Hughes said this may be a “tentative sign” that the rate of property price increase is easing off.
He said interest rate rises being announced by some lenders, with indications that European interest rates may rise as early as July, could take some of the heat out of the market. Prices may be up again next month but could then start to ease later in the year.
“There are tentative signs that momentum may be easing. The slower monthly increases of late and year-on-year drop in transactions in March, the first since January 2021, are indicating this,” Mr Hughes said.
He said affordability and buyer sentiment are being adversely impacted by looming European Central Bank rate rises, as well as cost-of-living pressures along with increased economic uncertainty.
Economist at Davy Stockbrokers Conall Mac Coille said: “The relatively modest 0.6pc rise in March may be the first sign house-price inflation is starting to slow from double- digit rates.” Experts say that the property market is unlikely to collapse this time as the Central Bank lending rules mean homebuyers have not been able to over-extend themselves and banks have been held back from engaging in reckless lending.
Meanwhile, ICS Mortgages has announced a second rise in its mortgage costs.
Its three and five-year fixed rates will increase by 1pc across all loan-to-value (LTV) bands.
It comes just two months after it increased is rates. The increase of 1pc means the ICS five-year fixed rate will go from 2.6pc to 3.6pc. This means an extra €131 per month, or €1,572 a year, in repayments for a homeowner with a €250,000 mortgage over 25-year term, and an 80pc loan to value, said Martina Hennessy of broker Doddl.ie.
Whether you are looking to switch lender currently, a first time buyer or moving home, should you have any concerns about the issues raised in this article, or investing in a buy-to-let property, why not chat to a Seaspray Mortgage adviser today about finding the mortgage that’s right for you:
Seaspray Financial Services Ltd trading as Seaspray Mortgages is regulated by the Central Bank of Ireland with registered number C165527