HOUSE PRICES AROUND the country are rapidly playing catch up with Dublin, the new Daft.ie report has shown.
In the capital, there was a conservative rise of just 3% in the final three months of the year, while elsewhere inflation hit 13%.
This is a radical turnaround from the same time in 2014, when prices shot up by 25% in Dublin, compared to a 2% rise across the rest of the country.
The author of the Daft.ie house price report, Ronan Lyons, put the change down to the ongoing impact of the Central Bank’s rules on mortgage lending that were introduced last year.
“The mortgage rules mean that whatever else happens, house prices cannot engage in the destructive upward spiral that took place in the decade to 2006,” he said.
In his commentary on the study, he also put a focus on actions that need to be taken by the government to ensure an increase in the supply of units to the market.
One suggestion is the provision of a single unified housing-related income top-up that would:
Render almost irrelevant the discussion of who is providing the housing – the state or the private sector – and thus prevent the ghettoisation of lower-income households.
While outside of Dublin may have seen the biggest increases, costs are still some way below prices in the capital.
The average asking price in south county Dublin sits at €514,845. This is over €300,000 more than the asking price in Meath (€205,427), where prices have gone up by 15.3% in a 12-month period.
A major issue across the economy remains the housing shortage, with just 25,000 homes on the market on 1 December last year – the lowest on that date since 2006.
Most of these reductions have come outside of Ireland’s five main cities.
Lyons also suggested that the government needs to take action to reduce construction costs.
“Some have criticised the new rules as hindering new housing supply but the solution to a lack of supply is not stimulating demand even more. If supply is lacking, the solution to this must be found in reducing construction costs, not in giving borrowers access to potentially dangerous levels of mortgage credit,” he said.
The findings of the study accord with trends identified by a separate survey published today by Sherry Fitzgerald.
The estate agent’s House Price Index found that Dublin house prices remained static in the fourth quarter of the year, bringing annual growth to 1.4%, compared to 18.0% in 2014.
When the capital is excluded from the national figure, the quarterly growth figure was 1.2%. Residential property outside Dublin was up 7.6% in the 12 months to end December 2015, compared to 13.9% during 2014.
“The single biggest issue for the residential market in 2015 was the worrying mismatch between the volume of vendors selling buy-to-let properties and the quantum of investors purchasing properties,” the chief economist of the Sherry Fitzgerald group, Marian Finnegan, said.
During the year, 33% of vendors were selling investment properties, while a further 13% of sales were as a consequence of bank repossessions, many of which would be investment properties.
In contrast, only 19% of purchasers were investors, an indication of a significant depletion in available rental properties, which will put further pressure on the rental sector.
We estimate that this trend will have resulted in a loss of over 40,000 units from the rental market in the period 2011 to end 2015. Based on the 2011 Census statistics, this represents a loss of 13% the private rented stock.
Additional reporting by Catherine Healy