House prices grow at fastest level recorded in more than two years

House prices grew at an annual rate of 4.5 per cent in April, the fastest level of growth recorded in 2½ years.

The latest official figures show the market is continuing to experience a coronavirus-related lift.

Prices in Dublin rose 3.5 per cent over the 12-month period to the end of April while prices outside Dublin rose 5.4 per cent.

At the outset of the pandemic, many had predicted property values would decline but a number of factors – increased savings, remote working, and ex-pats returning from London after Brexit – have triggered a pick-up in prices.

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The hiatus in construction and a knock-on impact on supply has also been cited as a factor.

The latest Residential Property Price Index from the Central Statistics Office found the number of property transactions in April fell month on month by 20 per cent to 3,138, but was still up by about a third on the April 2020 total. The total value of transactions filed with Revenue in April was €979 million.

Existing dwellings

Existing dwellings accounted for 85 per cent of the homes purchased, while the balance of 14.7 per cent were new dwellings.

The figures show households paid a median or middle-range price of €265,000 for a home in the Republic over the past year. The Dublin region had the highest median price at €390,000.

A separate CSO report showed the median age of homebuyers here has risen from 35 in 2010 to 38 in 2019. The report also found the proportion of properties purchased jointly increased from 47 per cent in 2010 to just over 62 per cent in 2019.

Goodbody economist Dermot O’Leary said his firm was forecasting house price inflation of 5 per cent this year.

“The robust demand trends seen in April’s mortgage approval data and the subsequent months’ property site Google searches data, combined with the likelihood that the pass through of new supply to market occurs with a lag, leads us to anticipate further rises in house price inflation over the coming months,” he said.

Umbrella group Brokers Ireland said the further rise in prices was as expected, and predicted by many, given the imbalance between supply and demand.

The group’s director of financial services Rachel McGovern said: “Clearly, the closure of the construction industry due to the pandemic had an impact and this is also evident in the fact that there was a jump of almost 40 per cent in existing dwelling purchases,” she said.

“With an absolute consensus that there is a severe lack of supply of homes, which is in turn continuing to drive prices upwards, it is shameful that the country is still talking about potential solutions at this stage,” she said.