House prices and rents are 'on the way down' thanks to more construction in Ireland, according to a leading real estate agent.

BNP Paribas Real Estate Director of Research John McCartney was speaking as construction output here is forecast to grow at the strongest rate among 19 European countries this year and next.

The study by Euroconstruct suggests output will expand by 3.2% this year and 4.4% in 2024.

The change comes at a time when total construction activity in Europe is expected to fall by 1.7% in this year and 2.1% next year.

The construction market forecast said the level of new housing completions in Ireland is now expected to "meet or exceed national targets", with completions estimated at 31,000 in 2023 and 33,450 in 2024.

'House prices are falling'

BNP Paribas Real Estate Director of Research John McCartney told Newstalk Breakfast the change is already being felt.

"I think to an extent we already are seeing the benefit of it," he said.

"In Dublin house prices are falling by nearly 2% per annum; elsewhere in the country house price inflation is trending towards zero.

"If you adjust for generalised inflation, real house prices are falling all over the country.

"In the rental market there has been a slowdown in rental growth.

"We saw some data yesterday that showed that there's still very strong rent inflation for new lettings.

"They're the minority; and if you take everything together, a blended average between new lettings and existing leases then rent inflation is slowing as well.

"So, I think we're already moving in the right direction."

'It's on the way down'

Mr McCartney said there are a number of reasons why rent payments are often higher than mortgage repayments in Ireland.

"An obvious one, and it's sometimes overlooked, is that we had really, really low mortgage rates for a long time," he said.

"As a result of that, mortgage repayments were just very low relative to the size of loan balances.

"The other side of it, of course, is that the rental market has been under-supplied.

"The surge in supply, I think, is now helping to rectify that.

"I think we can be optimistic that rent inflation is on the way down," he added.

Euroconstruct is an independent construction market forecasting network in 19 European countries that is holding its 96th conference in Dublin today.

Main image: An apartment development under construction near Griffith Avenue in Dublin, 29-07-2022. Image: Sam Boal/RollingNews