The CSO reported Wednesday that in the month of January Irish residential property prices fell by 1.4% nationwide. This is the largest fall in national prices observed in a single month since February 2012. Despite this fall, residential property prices remain up 15.5% over the last 12 months.
In Dublin residential property prices fell by 1.9% in January. This is the most significant monthly fall since January 2012. However, Dublin residential property prices are still 21.6% higher than 12 months ago.
Dublin house prices fell by 2.1% in January whilst Dublin apartment prices increased by 0.9%. However, 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.
Outside of Dublin residential property prices fell by 0.9% in January. However, prices are still up 9.3% compared with January 2014.
Overall Decline: At national level residential property prices are 38.5% lower than their peak level in 2007. Dublin house prices are 36.9% lower than their peak and Dublin apartment prices are 44.4% lower than their peak. Outside of Dublin residential property prices are 41.9% lower than their highest level in 2007.
Conall Mac Coille, chief economist at Davy, commented: "It is worth bearing in mind that Dublin house prices are still up by a massive 21.7% on the year and by 2.2% over the past three months. Overall, today’s data suggest that rushed transactions towards the end of 2014 to take advantage of capital gains tax exemptions are bearing down on demand in early 2015. At 5x average incomes, Irish house prices are clearly no longer cheap but not necessarily over-valued. Hopefully, the decline in prices in January is a signal that the new Central Bank rules to limit highly leveraged mortgage lending will stop a new bubble forming. In any case, we do not believe a welcome slowdown in house price inflation will threaten Ireland’s export-led recovery."
Peter Stafford, director of Property Industry Ireland, the Ibec lobby group, said: "Today's figures follow the trend seen in recent years of a fall in property prices in January. The size of the fall and the effect on prices in Dublin, which fell by nearly 2%, confirm that the Central Bank's new mortgage lending restrictions will have a considerable impact on the property market.
"We must learn from the mistakes of the past and ensure that when prices rise, it's because of growth and improved consumer confidence. Not because of a lack of supply. The construction industry, the property sector and the planning system must work together to make renting a real option for people and offer buyers better choices. There are still too many costs associated with new development, and delays in planning. Until they are resolved, achieving sustainable growth through balanced housing delivery will be difficult."