Irish house price inflation accelerates to 7.9% in April
Today’s news the Irish Residential Property Property Price Index (RPPI) rose by 0.4% in April, with the annual inflation rate accelerating to 7.9% confirms the housing market is heating up again. Still, this shouldn’t be a surprise given the lack of housing supply, but also that average earnings rose by 4.7% in the year to Q1 2024 to €50,400. Indeed, new Central Bank data show the average first-time-buyer in 2023 was 35 years old and had an income of €88,000 in 2023, up 3.6% from €85,000 in 2022. However, the housing market is also being affected by the relaxation of the Central Bank’s mortgage lending rules. The proportion of first-time-buyers with a loan-to-income (LTI) on their mortgage loan between 3.5-4x, has grown from just 6% in 2022 to 36% in 2023. This process of first-time-buyers taking on additional leverage will likely continue into H2 2024. Hence, our forecast for just 3.5% RPPI inflation in 2024 now looks too conservative.
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