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Irish Home Prices 2014: Dublin prices surged 22% in 12 months to May
By Michael Hennigan, Finfacts founder and editor
Jun 25, 2014 - 11:36 AM
Irish Home Prices 2014: Dublin prices surged 22%
in 12 months to May and jumped 4.2% in the month. Meanwhile, the CSO said today
that residential property prices at a national level, increased by 10.6%. This
compares with an increase of 8.5% in April and a decrease of 1.1% recorded in
the twelve months to May 2013.
National residential property prices rose by 2.3%
in the month of May. This compares with an increase of 1.4% recorded in April
and an increase of 0.3% recorded in May of last year.
Dublin apartment prices were 19.5% higher when
compared with the same month of 2013. However, the CSO says 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) rose by 0.6% in May compared with an increase
of 0.1% in May of last year. Prices were 1.8% higher than in May 2013.
House prices in Dublin are 44.4% lower than at their highest level in early
2007. Apartments in Dublin are 53.4% lower than they were in February 2007.
Residential property prices in Dublin are 46.3% lower than at their highest
level in February 2007. The price of residential properties in the Rest of
Ireland is 47.0% lower than their highest level in September 2007. Overall, the
national index is 45.1% lower than its highest level in 2007.
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home mortgages paid in Q1 2014 at lowest since 1972
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Conall Mac Coille ,
chief economist at Davy, commented - -
"Overall, the market remains exceptionally illiquid. So rising house prices
clearly reflect the lack of supply. Transactions in Q1 2014 represented around
1.5% of the housing stock, suggesting that the average property changes hands
around once every 70 years.
Liquidity in urban areas such as Dublin is little better than in rural
areas. The pick-up in house price inflation has not been driven by mortgage
lending. Rather, cash buyers continue to account for over 50% of transactions in
The lack of new housing supply, rising rents, confidence in long-term
economic growth prospects, together with favourable tax incentives and low
interest rates, have enticed cash investors back into Ireland’s housing market –
pushing up prices. However, cash buyers are unlikely to be a sustainable source
of demand over the longer term. We know that Irish banks are willing to lend at
relatively high income multiples in the range 4.75-5 times of household income,
with 90% loan-to-value ratios subject to affordability tests.
Although aggregate lending figures remain weak, today’s house price data
could raise alarm bells at the Central Bank of Ireland that first-time-buyers
are increasingly stretching their finances in Dublin, exposing themselves to
future increases in ECB interest rates. Affordability is clearly being
stretched, with average earnings growth in the Irish economy still close to
zero. Ultimately, we would expect regulatory authorities to take action to
ensure that house price inflation and mortgage lending are anchored by earnings
growth and affordability."
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