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Going up: Irish property prices rose by 16.3% in 2014

The rate of increase in Dublin is twice that of the rest of the country however…

Image: Eamonn Farrell/Photocall Ireland

THE CENTRAL STATISTICS Office’s (CSO) latest property price index figures have been released today and they serve as a sober reminder as to why the Central Bank has seen fit to introduce new mortgage rules.

Residential property prices across Ireland as a whole have increased by a massive 16.3% in 2014. By comparison, the same statistic for 2013 stood at 6.4%.

chart Source: CSO

However, a clear two-tier system is now in effect as prices in the capital increased at more than twice the rate of dwellings in the rest of the country.

Dublin’s prices are now 22.3% greater than they were a year ago, with the same figure for the rest of Ireland standing at 10.2%.

National price index Source: CSO

While the Central Bank’s new rules (chiefly concerning minimum levels of deposits that must be saved prior to the granting of a mortgage) are designed to stem the growth of a new property bubble, Ibec group Property Industry Ireland (PII) have voiced concern at the one-size-fits-all nature of the rules.

PII represent businesses working in the residential property sector and their director Peter Stafford, while approving of how the Central Bank arrived at their decision, believes there is room for a more dynamic approach.

“It’s good that the Central Bank recognises the role they have to play, and it’s good both how they arrived at this decision and the relatively benign time they’ve picked to implement it,” he told TheJournal.ie. 

The downside is the scale of number they are talking about. 20% is still a huge amount, particularly for first time buyers.
Prices are fragmenting rurally and generally behaving very differently from those in Dublin.
The real impact of the Central Bank’s policy will need to be carefully monitored in light of these trends.
Preventing a new bubble should not be at the expense of regions which are only just starting to recover.”
Our submission to the Central Bank recommends the introduction of key performance indicators (KPIs) for the housing market, and Patrick Honohan’s suggestion regarding special recognition for both modest borrowers and those who live in Dublin is a very relevant one also.

“If there are continued shortages of housing in high-demand areas it will both undermine quality of life and Ireland’s competitiveness.  Affordability is a social issues as well as an economic one,” Stafford added.

While property values are still increasing at a rate of knots, they remain well below their highest levels reached during the boom years.

Dublin properties are 37.7% lower than their peak of February 2007, while residences in the rest of the country are still 41.4% lower than the level reached in September 2007.

The monthly release by the CSO is the most comprehensive study taken into property values in Ireland, and the index on which many of the banks’ mortgage models are based.

The data is compiled from information on mortgage drawdowns provided each month by eight of the main mortgage lending institutions in the state.

Read: Average earner saving a €30,000 home deposit? Enda says that’s ‘achievable’

Read: Here’s what €220,000 will get you as a first-home buyer across the country

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