Property
Irish House Prices: Dublin prices up 23% in 12 months to July 2014; Rest of Ireland gain 5%
By Finfacts Team
Aug 27, 2014 - 11:46 AM

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Irish House Prices: In the year to July, residential property prices at a national level, increased by 13.4%.  This compares with an increase of 12.5% in June and an increase of 2.3% recorded in the twelve months to July 2013. Dublin house prices rose 23.2% while Rest of Ireland prices gained 4.9%.

The CSO reported that residential property prices rose by 2.0% in the month of July.  This compares with an increase of 2.9% recorded in June and an increase of 1.2% recorded in July of last year.

In Dublin residential property prices grew by 2.7% in July and were 23.2% higher than a year ago.  Dublin house prices rose by 2.5% in the month and were 23.1% higher compared to a year earlier.  Dublin apartment prices were 26.3% higher when compared with the same month of 2013. See Tables 6, 7 and 8.  However, the CSO said 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 1.3% in July compared with a decrease of 0.1% in July of last year.  Prices were 4.9% higher than in July 2013.

Overall Decline: House prices in Dublin are 41.2% lower than at their highest level in early 2007.  Apartments in Dublin are 48.4% lower than they were in February 2007.  Residential property prices in Dublin are 43.0% lower than at their highest level in February 2007.  The price of residential properties in the Rest of Ireland is 45.1% lower than their highest level in September 2007.  Overall, the national index is 42.3% lower than its highest level in 2007.

Irish House Property: Cash purchases accounted for 35% of transactions in Q2 2014

Irish students face rising rents and 40% fewer properties available

Irish home mortgage loans issued in Q2 2014 at annual rate rose to 1974 level 

Angela Keegan MD of MyHome.ie said: “The fact that we have now had three months of growth in property prices outside of Dublin is very heartening and shows that the property market nationally is moving in the right direction. Prices in the rest of the country are now 5% higher than they were a year ago, having risen 1.3% in July. Rising prices and an increase in the number of transactions will boost confidence in the property market”

“While the continuing price recovery in Dublin is also most welcome, the 23.2% year on year increase, driven by the shortage in supply, is not sustainable and needs to be addressed. While stock levels rose recently to 3,677 homes this still isn’t sufficient to cope with the pent up demand that exists. The shortage is putting first time buyers in Dublin especially under huge pressure. We hope the Government fully realises the urgency of the situation and moves to address it with a range of suitable measures in the budget.”

“We have a supply problem and we clearly need more new houses to come on the market in Dublin and other urban areas to keep affordability at appropriate levels,” Keegan concluded.

David McNamara, economist at Davy, commented: "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 market. In Q2, new mortgage lending accounted for just 49% of transactions by volume. The lack of new housing supply, together with rising rents, has enticed cash buyers into the market. Residential property transactions were up 40% yoy in the first half of the year at 15,592, while little new supply has come on-stream – pushing up prices. However, cash buyers are unlikely to be a sustainable source of demand over the longer term, so demand from mortgage holders will become an ever-increasing share of the market as cash buyers begin to leave.

Nonetheless, house building has begun to pick up. In the first five months of the year, completions totalled 3,941 compared to 2,997 in the same period in 2013. While the pick-up is encouraging, house building still remains at exceptionally low levels and is nowhere near the 18,000 units required each year to satiate new demand, according to recent ESRI population studies. Price rises could well persist in the short term until ample supply begins to hit the market."

Peter Stafford, director Property Industry Ireland, an Ibec unit, said: "Today's figures show the real impact of a lack of new supply into the housing market. With no new major housing schemes in urban areas reaching the market, and interest amongst buyers improving, it is not surprising that prices continue to rise so fast, especially in Dublin.

"October's Budget is a great opportunity to continue the reforms made in Construction 2020 and bring new housing schemes through planning and onto construction as soon as possible. This is the only way that price rises can be moderated. Students and young families have been some of the biggest losers during this period of price inflation. The budget is a chance to address their specific housing needs."


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