The average cost of a home in Dublin has climbed by 11.8 per cent over the last 12 months and double-digit house price increases are set to continue all the way through next year, according to the latest house price report from MyHome.ie.
The new survey shows prices climbing in the capital by about €750 a week over the last 12 months while prices elsewhere in the State have paused for breath, following a dramatic surge during the summer.
The mix-adjusted price on newly-listed properties in Dublin rose by 1.6 per cent in the third quarter. Nationally prices rose by 0.4 per cent in the three months to the end of September and are up 8.9 per cent over 12 months.
The average mix-adjusted asking price for new sales in Dublin is now €366,000, an increase of €39,000 on this time last year. The corresponding figure nationally is €253,000, up €21,000. MyHome.ie is owned by The Irish Times.
The author of the new report, Conall MacCoille, chief economist at Davy, said the acceleration in asking prices which began in late 2016 has continued through 2017 and is likely to continue through 2018.
“At the start of the year we predicted double-digit growth in house prices for 2017 but due to the strength of asking-price inflation in the third quarter we are predicting that double-digit inflation is also likely to persist through 2018.”
Lack of supply
He pointed to several reasons why house prices are rising so strongly. “These include the lack of supply, the economic recovery and the fact household incomes are now rising by 2-3 per cent per annum.”
He said the “key factor” driving house prices higher has been the mortgage market. “The average loan drawn down by first-time buyers in the last quarter was up 9.4 per cent in the year to €200,000 from €183,000 in mid-2016.
“This has meant that leverage on new mortgage loans has increased and with ever more desperate buyers seeking larger loans as they compete for the few properties listed for sale, this trend is set to continue and to ensure inflation remains at double-digit level.”
Mr MacCoille said the figures provided “a challenging backdrop” for the Government heading into Budget 2018. “Measures to boost supply have had limited results so far. Neither will the crisis be solved by tax incentives or subsidies for the construction sector - that will almost inevitably lead to higher land prices.
“With limited progress on planning, inadequate land supply and inappropriate constraints on building heights, Ireland’s housing crisis clearly will not be solved in the near future” Mr MacCoille said.
MyHome.ie managing director Angela Keegan said the lack of supply would underpin rising prices for the medium term.
“At the end of the third quarter there were just 21,424 properties listed for sale on the MyHome website. This total is down 6.5 per cent on last year and represents just 1.1 per cent of the total housing stock of two million homes. The situation improved slightly in Dublin, where the number of properties for sale rose by 3.3 per cent to 4,275. However, this is represents an even smaller total of 0.9 per cent of the housing stock in the capital.”
She said that in spite of the tightness in the market, “transaction volumes are currently running 10 per cent ahead of where they were last year and at this rate will be close to 55,000 transactions. This is a positive development but we are still some way off the 90,000 or so transactions which one would expect to see in a properly functioning market.”
