HOUSE PRICES ACROSS Ireland rose by 2.3 per cent nationally over the past year but Dublin continues to outpace the rest of the country in the upward trend.

The increase means that the pace of growth is now at a level not seen since 2007 .

The Central Statistics Office’s residential property price index showed the 2.3 per cent yearly rise in stark contrast to the 13.6 per cent decrease seen in the year to July 2012. On a monthly basis prices rose by 1.2 per cent in July making it the fourth consecutive month of increase.

The capital has begun to show strong price growth with average house prices growing by 3.3 per cent in July, reaching a level 8 per cent higher than this time last year.

The influence of Dublin on the nationwide figures can be seen when the capital is excluded from the calculations. Excluding Dublin, prices fell by 1.4 per cent over the last twelve months at 0.1 per cent in July.

Investec Ireland’s chief economist Philip O’Sullivan explained that higher prices in Dublin were a result of elevated rental yields, muted completions activity and still low credit availability leading to a low volume of transactions. He outlines what Investec expects from the market in the immediate future:

Looking ahead, we continue to see our two-tier narrative playing out, with the still high inventory levels continuing to act as a barrier to a sustained improvement in rural house prices over the coming months, while in Dublin and its commuter belt, much tighter supply, elevated rental yields and a superior economic outlook should continue to support upward price moves.

O’ Sullivan added that the impact of the recent removal of the legal impediment to repossessions “remains to be seen and is the key ‘known unknown’ in relation to the outlook for prices”.

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