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Dublin: 6°C Thursday 13 May 2021

Dublin house prices have stopped rising because people just can't afford them

The latest property price figures are in for June.

Image: Barry Cronin/PA Archive

DUBLIN PROPERTY PRICES have fallen for the second straight month as costs outside the capital continued to play catch up.

The average price of homes in Dublin went down 0.4% in June after a smaller fall in May, according to the latest figures from the CSO.

The decrease was slightly greater in the prices for apartments than those for houses.

But outside the country’s largest city, prices were up 0.4% following a 1.1% rise the previous month.

However previous cost hikes in Dublin meant average June prices were still 11.1% higher than the same time in 2014, compared to a 9.7% annual increase in other parts of Ireland.

Prices Source: CSO

Affordability ‘most stretched’ in Dublin

In a note this morning, before the latest figures were released, Davy chief economist Conall Mac Coille said Irish house prices were now selling at five times average earnings – a similar ratio as for property in the UK.

Affordability is starting to act as a constraint; our estimate is that Irish house prices are six times average incomes in Dublin but below three-to-four times in some rural areas,” he said.

“So valuations have become most stretched in the capital.”

House prices rising in Ireland Source: Niall Carson/PA Archive

Mac Coille noted that forward-looking indicators suggested prices would grow at a low rate through the second half of the year.

He said the catalyst for the slow-down was the Central Bank’s new mortgage lending rules which limited the amounts people could borrow relative to both their incomes and deposits from February.

The CSO’s figures are based on completed sales backed by mortgages, however separate analyses of asking prices have also showed minimal increases – particularly in Dublin – in recent months.

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About the author:

Peter Bodkin  / Editor, Fora

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