Trade war will influence housing market, report says

Ellen O'Donoghue

The Irish property market’s disproportionate reliance on high income earners working in multinational sectors would see it vulnerable to any sudden economic shock, according to a new report.

The latest quarterly house price report from MyHome, in association with Bank of Ireland, has said that the threat of a trade war will influence how the housing market will perform this year.

However, the housing market’s record low supply levels and continued strong demand means that their forecast of 5 per cent asking price inflation may prove too conservative if a trade war does not happen.

Conall MacCoille, author of the report and chief economist at Bank of Ireland, said that record low supply and continued surging demand are still driving the property market.

“But the risk here is that Ireland’s relatively thin, illiquid housing market, reliant on those at the top of the income distribution could be exposed to a sudden negative economic shock, such as the risk of a US-EU tariff war, especially if it were to disproportionately hit employment in the high-paid multinational sector.”

The MyHome report for the first quarter of 2025 found that annual asking price inflation was 8.1 per cent nationwide.

Annual asking price inflation in Dublin is now at 6.2 per cent, and in the rest of Ireland, is 9.2 per cent.

The report found that asking prices nationally rose by 1.7 per cent on the quarter, by 2.6 per cent in Dublin, and by 1.1 per cent in the rest of the country.

One in seven properties is being sold for 20 per cent over the asking price.

MyHome said that this means the median asking price for new instructions nationally in the quarter was €375,000. It was €450,000 in Dublin and €315,000 in the rest of the country.

The average mortgage approval was €318,400 in January, up 7 per cent on the year, and pointing to further price gains.

First time buyer mortgage drawdowns rose to 26,200 in 2024, their highest level since 2007, but mover drawdowns fell to just 9,000 loans, now 20 per cent below pre-Covid levels.

Irish house prices are now eight times the average income of €51,000, their most stretched level since 2009, the report further states.

The average time to sale agreed was just 11 weeks in the first quarter of the year, close to a historic low; however, in March 2025, there were just 10,800 homes available for sale on MyHome, a fresh record low.

15,900 apartments, equivalent to at least two years’ supply, were under construction as of September 2024, indicating a pick up of completions.

Completions of scheme houses rose to 16,200 in 2024, or including one-off houses, to 21,600. In both cases, these are the highest levels attained since the Celtic Tiger era.

Joanne Geary, managing director of MyHome, said that as the threat of a trade war with the US looms, the country’s reliance on certain sectors of the economy will come into “sharp focus”.

“The housing market is vulnerable to any economic headwinds, so it is imperative that the Government limits the impact if at all possible while also continuing to ramp up housing supply.”

MyHome estimate that residential transaction volumes in the first quarter of 2025 were up 6 per cent on the year, while new listings for sale in the six weeks to March 16th were up 4,800, stronger than in both 2024 and 2023.

Nonetheless, the report said it still makes more sense to buy than to rent. With average rents now €1,693 and €2,226 in Dublin, rental yields exceed 4.5 per cent in all but two counties.