DAVY VIEW

Residential property prices decelerated in May despite ongoing weakness in housing market supply, reflected in low transaction volumes. Month-on-month (mom) prices grew 0.1%, down from 0.4% in April and 0.5% in March. In annual terms, year-on-year (yoy) prices grew 8.2%. However, demand remains high, and a well-established seasonal pattern should see an increase in activity into the second half of the year. We therefore expect prices to accelerate again next month, and we forecast a full-year average rise in residential property prices of 7.5%.