Source: Rollingnews.ie

A NEW REPORT suggests that property prices in Dublin are 25% overvalued against the incomes of those living there.

The latest house price index by The Economist magazine focuses on the property marked in '22 of the world's most vibrant cities'.

The study suggests that before the economic crisis city and national prices broadly rose in tandem in the studied cities. Since the crash, prices in those cities have risen on average at twice the rate of their respective countries.

Dublin's housing crisis was outlined in stark terms by the most recent Daft.ie rental report, which reported that the city's rental prices are now €500 per month higher than at the height of the boom  in 2007.

The Irish capital's position in the study however, with house prices rated 25% over household income, is actually relatively benign compared with some of the figures seen in other cities.

'Supply and demand'

Amsterdam for example is running at 49% overvalued property compared with incomes, with Hong Kong and Vancouver a striking 94% and 65% respectively.

The report outlines the reasons for what's going on with house prices in the studied cities as being 'demand, supply, and the cost of money'

However, the study also states that the global market may be at a turning point, with house price inflation slowing over the past 12 months, with sky-high prices, a curtailment on the ability of foreigners to buy property, and planning restrictions and local objections to same all combining to slow the rapid growth of prices.

It rates London as a bellwether (that is, indicative of trends generally and an indicator of where things will go) for the global housing market, given its vulnerability as a result of Brexit. "Prices seem to have climbed high enough to encourage new supply," it states. "London added 40,000 homes last year - the most for decades."

This is not totally out-of-kilter with Ireland, where the number of new homes constructed jumped this year by 30%, nearly two-thirds of which were in Dublin.