House price inflation surges to pandemic high of 13.5%

House price inflation has surged to a pandemic high of 13.5 per cent, according to the Central Statistics Office (CSO). The figures for October represent the strongest level of price growth seen in the market since June 2015.

Many had predicted property values would fall as a result of the pandemic but a number of factors, including the ongoing shortfall in supply, increased savings and remote working, have led to an acceleration in prices.

The latest data from the CSO show residential property prices increased by 13.5 per cent nationally in the year to October. This compares to an annual increase of 12.5 per cent the previous month, and an annual decrease of 0.5 per cent in October 2020.

In Dublin, where supply pressures are most acute, prices rose by 12.3 per cent year on year, while prices outside the capital were 14.6 per cent higher.

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In money terms, the average price paid for a home in the 12 months to October was €320,562. The mean price in Dublin (€494,917) was the highest in any region or county.

Dún Laoghaire-Rathdown had the highest average price in the Dublin region at €682,459, while south Dublin had the lowest at €401,571.

Outside Dublin, the mideast was the most expensive region, with a mean price of €334,275; Wicklow was the most expensive county, with a mean price of €428,723.

The Border region was the least expensive region in the year to August, with a mean price of €163,443.

The CSO said the number of property transactions rose by 0.7 per cent in October to 4,335, with the total value of transactions put at €1.5 billion.

Overall, prices of new dwellings have risen by 77 per cent from their trough in the middle of 2013, the agency said, while prices of existing dwellings are now 105.8 per cent higher than at their lowest in 2012.

Goodbody chief economist Dermot O’Leary said the latest figures implied that annualised rate of growth in the three months to October was 23 per cent, slightly below that of September but still among the fastest in the last decade.

“While growth in Irish residential property prices has climbed to unforeseen heights relative to expectations at the beginning of the pandemic, we suspect the rate of growth will ease substantially from 13 per cent in 2021 to 5 per cent in 2022,” he said.

Rachel McGovern of Brokers Ireland said: “What is evident from the figures is that more existing dwellings are now being sold, comprising over 85 per cent of purchases year-on-year in October, an increase of 16.3 per cent, while new dwellings saw a decrease of 4 per cent in the same period.”

“However, overall the number of properties being transacted, 4,335 in October, is low given the level of pent-up demand, even though it did represent a 12.7 per cent increase year on year,” she said.

Ms McGovern said supply is coming on stream but more slowly than is desirable to stem the current level of growth in prices.