Residential property prices fell again in October

Residential property prices continued to fall in October, but the pace of decline moderated, new data from the Central Statistics Office showed.

The property price index fell 0.4 per cent in the year to October, compared to a drop of 0.8 per cent in September.

The decline was more pronounced in Dublin, where prices were 1.2 per cent lower over the year. House prices decreased by 1.5 per cent, but apartments rose 1 per cent. Fingal recorded the highest house price growth, at 2.5 per cent, while Dublin City saw a decline of 4.4 per cent.

Outside the Dublin area, property prices climbed 0.4 per cent overall. House prices were 0.5 per cent higher, and apartment prices gained 0.6 per cent. The southwest region put in the strongest performance, rising at 3.3 per cent, but the mid-west saw a prices fall by 4 per cent.

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Month on month, prices rose 0.6 per cent, the largest monthly gain since July 2019.

The coronavirus pandemic had a chilling effect on the property market earlier in the year, with banks putting additional restrictions on lending as the economic impact of Covid-19 increased uncertainty. But analysts said the effect wasn’t as pronounced as initially feared.

KBC analyst Austin Hughes said there were hints that the Irish property market has weathered the initial hit from Covid-19.

“At the margin, there are tentative signs that a slight weakening through the spring has been reversed of late. In the same vein, October saw a small pick-up in property prices and the annual inflation rate across the rest of Ireland,” he said.

“While the months over end-year typically see some ‘seasonal’ easing in Irish house prices, and this pattern may be repeated in upcoming data, the tentative evidence from the October house price data is that the initial impacts of Covid-19 have been weathered with very limited negative effects on property values.”

Off the peak

Across the State, property prices are 17 per cent off the peak recorded in 2007, with Dublin prices 22.3 per cent lower and the rest of the country recording a 19.6 per cent decline.

Since the crash, property prices have risen by 84.6 per cent from the low point hit in early 2013. Dublin residential property prices are 92.5 per cent higher than the low recorded in February 2012, with the rest of the country 84.9 per cent higher than the May 2013 trough.

“Residential prices in Ireland have flatlined since Q3 2018,” said Dermot O’Leary, chief economist with Goodbody. “There is no great difference in house price inflation in Dublin [-1.5 per cent year on year] and outside Dublin [0.4 per cent year on year] at this point. Contrary to our initial expectations at the onset of the pandemic, there has been no noticeable impact on pricing dynamics, mirroring trends seen elsewhere.”

The number of housing transactions also continued to recover, with October down 17 per cent year on year, the best performance since March.

“Recent evidence from mortgage approvals and brokers suggest that sales trends have continued to be robust in recent months and will be reflected in the CSO data in the coming months,” said Mr O’Leary. “ With stock levels remaining close to all-time lows, this suggests that pricing will continue to remain solid in the opening months of 2021.”