House price inflation continues to moderate and the annual rate of increase is likely to have slowed to 5 per cent by the end of the year, according to the latest survey from property website MyHome.ie
The survey found that asking prices on Dublin properties newly listed on the website fell by 0.1 per cent in the third quarter of the year. It is the first time a decline in asking prices has been record by the website in almost three years. Across the State asking prices for new sales rose by 1.8 per cent.
Average asking prices
According to the survey, compiled in conjunction with Davy, the average asking price for recently listed Dublin properties is €312,000, while the corresponding national figure is €217,000. For the entire stock of properties listed for sale, the average asking price is €205,000, while in Dublin the corresponding figure is €286,000.
The percentage change year-on-year for new sales is 4.8 per cent in Dublin and 6 per cent nationally. The report was compiled by Davy’s chief economist Conall MacCoille who said he expected house price inflation to slow to 5 per cent by December, with a similar gain likely in 2016.
Mr MacCoille said affordability issues, the Central Bank’s mortgage lending rules which were imposed at the start of the year, and an improving stock of houses available for sale were combining to cool prices, particularly in Dublin.
“The house price to income ratio in Dublin – based on a median asking price of €280,000 for a three-bed semi-detached house, is now a 6.1 multiple of average incomes of €46,000,” he said. “While the ratio varies from five in the mid-east to a low of 2.8 in the midlands, the overall figure is 5.3, which is high by international standards.”
He said that the Central Bank’s new lending rules had prevented first time buyers in Dublin from taking out ever higher mortgages. “The 20 per cent-plus rates of inflation of the summer of 2014 were simply not sustainable, and this is a positive. The fact that the number of properties available for sale in Dublin is up 45 per cent to 5,200, compared to this time last year, has also acted as a further brake on price growth.”
Sustained decline unlikely
However Mr MacCoille said a sustained decline was unlikely. “Wage growth coupled with tax cuts in Budget 2016 will help to support house price inflation. Private sector earnings grew by 2.4 per cent in the first half of the year and Budget 2016 looks set to implement a €1.2 billion to €1.5 billion giveaway which could boost disposable incomes by 1 per cent. “
He said these measures “and the ongoing lack of housing supply, and strong rental inflation, will support transaction prices”.
Angela Keegan, managing director of myhome.ie, said Government action to address the lack of supply of new homes in certain areas, particularly in Dublin, was badly needed.
“There were 6,745 housing completions in the first seven months of 2015. While this is up 16 per cent from the same period in 2014, the figures are coming off a very low base and will probably struggle to exceed 13,000 this year, well short of the 25,000 required.”
