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Dublin: 9 °C Wednesday 20 November, 2019
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Dublin house prices rise but supply, not bubble, the key worry says economist

Prices in Dublin were up by 7.7 per cent on last year but prices dropped in every other county in the state according to Daft.ie

First-time buyers have begun buying says Trinity College economist Ronan Lyons.
First-time buyers have begun buying says Trinity College economist Ronan Lyons.
Image: Laura Hutton/Photocall Ireland

PROPERTY ASKING PRICES in Dublin maintained a steady rise in the third-quarter of the year while prices dropped in every other county in the state.

Prices in Dublin were up by 7.7 per cent compared to the same period last year with asking prices outside the capital falling 6.7  per cent.

The figures are contained in the latest Daft.ie house price report which showed that asking prices across Dublin have risen for the third consecutive quarter. All of the six different areas in Dublin that are monitored as part of the report rose, the first time since 2007 that this has happened.

Although prices continued to fall outside the capital, the 6.7 decline was the smallest since mid-2008. The biggest falls were observed in north-west where asking prices in Leitrim, Roscommon, Sligo and Galway all fell by double digits.

imageMap showing the change in house prices (Image: Daft.ie)

Supply shortages

The supply of property continues to be the primary issue across the country with the stock of properties on the market falling by 10,000 over the past year, the second year in a row a fall on that scale has been seen.

First-time buyers in Dublin have been delaying their purchases over the past number of years according to Trinity College economist Ronan Lyons, who says what were are now seeing is those buyers becoming active and stimulating the market.

Concerns about a new bubble emerging in Dublin are probably overstated however he says, “Ultimately bubbles can only emerge with loose credit, and there are few who would argue that the housing market in Dublin is cursed with easy money.”

The demand that has been awoken can be seen in the report which shows that two-thirds of Dublin properties find a buyer within four months, up from 56 per cent a year ago. Lyons explains the current state of play in Dublin:

What we are witnessing is something like the lancing of a boil. For almost five years, a significant chunk of would-be first-time buyers based in Dublin held off making a purchase, enjoying not only falling prices while they did but falling rents for the early years also. And they saved. Then, probably due to a combination of the end of mortgage interest relief, rising rents and starting their own families, they started to buy.

Lyons’ concern is  not another credit-fuelled bubble in the capital but the fact that Dublin is not building enough housing units. A consistent supply would stop prices in the capital rising again to unsustainable levels he says:

A city of almost half a million households is building only slightly more than 1,000 units a year. This is probably one tenth of the number of new homes it needs. Available figures suggest that there are about 10,000 first-time mothers in Dublin each year.

The full Daft.ie house price report can be downloaded here.

(Note: Daft.ie is part of Distilled Media Group. Journal Media Ltd has shareholders – Brian and Eamonn Fallon – in common with Distilled Media Group)

Read: Dublin property prices up 10.6 per cent as cash sales increase >

Read: Average rent hits €825 per month as Dublin prices rise significantly >

Read: Again? House prices in parts of Dublin jump by 12% >

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Rónán Duffy

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