Increases in house prices slow ‘due to loan limits’

HOUSE price inflation has slowed due to the Central Bank’s tight lending rules, said an estate agents firm.

Prices rose by 0.4% in the past three months versus a 2.1% rise for the same time last year.

Research by Douglas Newman Good estate agents suggests the change is due to the Central Bank’s limits on lending.

Under revised lending measures introduced this year, banks are allowed to hand out up to 20% of loans a year that go beyond the Central Bank’s restrictions.

But the amount of loans available under the mortgage exceptions have almost dry, meaning fresh applicants are only being lent a sum equal to 3.5 times their income.

This restriction on the amount of money they have to buy a house is in turn cooling the rate of price increases.

DNG said this had led to the market ‘stabilising significantly and giving way to more sustainable property prices’.

It said: ‘The effects of the Central Bank Lending Rules are now clearly showing in Ireland’s property prices.

‘Since the measures were tightened in January, inflation in the residential market has stabilised significantly, giving way to more sustainable property prices.’

But Paul Murgatroyd, DNG head of research, said prices of entrylevel homes in Dublin are continuing to rise at a higher than the national average, up by 8% in the past year.

DNG’s figures are similar to those of the Central Statistics Office, compiled from officially recorded sales, which show property prices in Dublin up by 7.2% in the year to July.

Prices in Dublin have risen by 88% from their low point in 2012 but still remain 37% below previous inflated peak in 2006.

The DNG research also suggests that increased levels of residential construction in Dublin, along with the Central Bank rules, are helping to control inflation in the capital.

DNG chief executive Keith Lowe said: ‘These figures are good news for buyers and sellers as Ireland’s property market stabilises.

‘The focus for government and policy makers now needs to be on ensuring sustainable flows of mortgage finance to allow buyers to enter the home ownership market.

‘Our findings on the cost in the entry-level homes sector also indicates that Budget 2019 is the right time for Government to introduce a new Affordable Housing Scheme.’

But Fianna Fáil TD John Curran said the Government had let down many people who faced the prospect of never owning their own home due to the crisis in affordability.

He said: ‘Over a year ago, the Government’s repair-and-lease scheme promised to deliver 3,500 public homes nationwide. It won’t be of any surprise to those continuing to struggle to find a roof over their heads that just 15 of these units have been supplied.

‘The average price of a secondhand semi-detached house in Dublin has now risen beyond €440,000 – a price out of reach for even most working families.

‘Fianna Fáil is determined to change the Government’s unfair policies on housing.’

‘Unfair policies on housing’