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News : Property Last Updated: May 29, 2014 - 7:43 AM

Irish House Prices 2014: Dublin prices up 3.1% in April; Increase of 17.8% in 12 months
By Finfacts Team
May 28, 2014 - 11:58 AM

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Irish House Prices 2014: In the year to April, residential property prices at a national level, increased by 8.5%.  This compares with an increase of 7.8% in March and a decrease of 1.2% recorded in the twelve months to April 2013. Dublin prices rose 3.1% in the month and are up 17.8% in 12 months.

The CSO said residential  property prices rose by 1.4% in the month of April. This compares with a decrease of  0.7% recorded in March and an increase of 0.8% recorded in April of last year.

In Dublin residential property prices grew by 3.1%  in  April and were 17.7% higher than a year ago.  Dublin house prices rose  by 3.1% in the month and were 17.8% higher compared to a year earlier. Dublin apartment prices were 17.5% higher when compared with the same month of 2013..  However, the statistics agency said that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series.

The price of residential properties in the Rest of Ireland (i.e. excluding Dublin)  fell by 0.3% in April compared with a increase of 1.2% in April of last year.  Prices were 1.3% higher than in April 2013.

Overall Decline: Residential property prices in Dublin are 48.5% lower than their highest level in early 2007. House prices in Dublin are 46.7% lower than their peak in April 2007. Apartment prices in Dublin are 54.2% lower than their peak in February 2007. In the Rest of Ireland residential property prices are 47.4% lower than their highest level in September 2007.  Overall, the national index is 46.3% lower than its highest level in 2007.

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Conall Mac Coille, chief economist at Davy, commented - - "Residential property prices were up 1.4% in April, bouncing back from a weak Q1. Prices were up 8.5% on the year. Within this, house prices were up 1.4% on the month, an 8.3% rise on the year, while apartment prices were up 2.3% mom, an 11.8% yoy rise.

Following the cooling in house prices in Q1, it looks like the market has bounced back strongly in April. However, given the illiquid nature of the market at present, we cannot garner too much from the volatile monthly swings in the index. But the distinction between the supply-starved Dublin market and the rest of the country remains clear in the data. In Dublin, prices were up 3.1% mom, and 17.7% yoy. Outside Dublin, prices were down 0.3%, +1.2% yoy.

As we have discussed before, the lack of new builds in the capital has contributed to the strong rise in prices in recent times. However, notwithstanding the recent hysteria surrounding a new housing bubble, it must be remembered that prices are still 48.5% below their peak in the capital, while credit remains weak. So the key issue facing the housing market is not whether a new bubble is developing, but more the steps needed to get the construction sector building more new homes."

Speaking about today's report, Tom Parlon, director general of the Construction Industry Federation (CIF), said, “These latest statistics should come as no surprise to anyone who has been following the property market. A shortage of supply means the level of demand is not being catered for and this is leading to an increase in prices in Dublin and certain other urban areas. 

“Despite the ESRI and the Government stating that we need 25,000 units built annually to meet the country’s demographic needs, we are not coming close to that figure. Last year only 8,301 units were completed throughout the country, including just 1,360 units in Dublin. This year the market is likely to have a maximum of 10,000 units built nationally and less than 2,000 in Dublin. That simply isn’t enough.

“Until we see discernible action taken to help increase supply then Dublin and other areas will continue to be susceptible to large house price jumps. It’s simple economics, if more people are looking to buy houses than the market is able to supply then this will lead to an upward pressure on prices.

“There were a number of measures included in the Government’s recent strategy on the construction sector, Construction 2020 which potentially could bring about extra supply. But we need to keep moving forward and flesh out the details in that strategy. 

“You can’t just flip a switch and have more housing. It takes 18 months to 2 years for large housing developments to be brought to market.  Given the timeframes involved we can’t afford to delay, we need to take action soon.  The longer it takes to fix the problems, the greater the impact it will have on house prices,” Parlon concluded.

The Society of Chartered Surveyors Ireland (SCSI) said today that the lack of supply in the market, particularly in Dublin, is fuelling the year on year increase of 18% in house prices to April as reported by the CSO. It also pointed to the 10% decline in the volume of transactions in Dublin in April compared to March 2014 as evidence of a lack of supply.*

The SCSI said that in the context of the recent Housing Agency report highlighting a demand for 80,000 units in urban areas over the next 5 years, urgent action must be taken to relieve the supply pressure on the market and to avoid a situation whereby house prices are pushed out of reach for prospective purchasers.

Conor O’Donovan, director of policy & communications, said “We have gone from building 89,000 units in 2006 to 8,300 in 2013 and clearly the current price inflation is being caused by the lack of building in recent years.

“The SCSI does not want to see a return to the unchecked price inflation we saw over a decade ago and neither do we want to see a continuation of the current house price volatility. We need to ensure more certainty in the economy and the Government’s Construction 2020 measures to meet the housing shortage must therefore be quickly progressed” O’Donovan said.

The Construction 2020 strategy identified 2,000 hectares of zoned land for housing in Dublin which is well served by public transport and other essential infrastructure and has the capacity to accommodate 30,000 units.

“We now need to see action on the supply side to ensure that the barriers to development including planning delays, zoning restrictions and availability of development finance are overcome to encourage builders to build homes on these zoned sites in urban areas to meet both the social and private housing requirements as identified by the Housing Agency. Demand is not the issue – a shortage of supply is” O’Donovan concluded.

*Property Price Register Data: 695 (April) transactions and 774 (March)

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