Figures from property website MyHome.ie show that asking prices for new homes in the second quarter of this year were up 7.3% compared with a year earlier.

The annual increase was the fastest since the third quarter of 2022.

According to the report, asking prices rose by just over 5% compared with the first three months of 2024, bringing the median price to €365,000.

Labour market

The report’s author Conall Mac Coille (chief economist, Bank of Ireland) said that house prices had gained further momentum, accelerating from a 6.5% annual increase in the first quarter of this year.

He pointed to the sustained strength of the Irish labour market as having a significant effect on the market.

“The 4.7% rise in average earnings to €50,300 in the year to Q1 2024 was always likely to push up house prices. Indeed, the average mortgage approval in April was €313,000 – also up 4.6% on the year.”

The economist added that the relaxation of the Central Bank mortgage-lending rules for first-time buyers had seen the share of first-time buyers with a loan-to-income ratio on their mortgage between 3.5 and 4 leap from 6% in 2022 to 36% last year.

The MyHome.ie figures also show continuing low levels of supply in the market, with just 12,500 properties listed for sale at the end of June – close to the historic low in Q1 2024 and down 11% on 2023.

Construction weakens

Separate figures from BNP Paribas Real Estate show that a decline in construction activity accelerated in June.

Its construction index dropped to 47.5, from 49.8 in May. Any figure below 50 means that activity fell.

A breakdown showed a mixed picture, with commercial construction slumping to 43.3 after three months of growth. Residential activity, however, grew for the fourth month in a row, recording 52.4.