House price hikes set to slow amid Brexit concerns and ‘lack of value’
HOUSE price growth is expected to slow down in the coming years amid concerns about Brexit and a lack of perceived value in the property market.
Supply is finally increasing as new developments come on stream, and asking prices are being cut back accordingly.
The new property price survey from the Society of Chartered Surveyors Ireland (SCSI) and the Central Bank indicates further slowdown in the rate of house price inflation.
Only 59pc of estate agents now expect house prices to increase nationally in the next 12 months – this is down from 78pc just three months ago.
In addition, the predicted national increase in house prices over the coming year has fallen from 5pc to 2pc.
It follows recent data published in the Irish Independent which showed house prices nationwide beginning to flatline – with a semi-detached home now beyond reach for ordinary families.
Estate agent and SCSI member John O’Sullivan said it was clear from the new survey findings that affordability is now affecting house price inflation. He said this was welcome news for the market and the general economy.
“While price inflation has waned for high-value property, it’s likely that it will also slow for other property classes over the short term. That said the entry level, where demand is very high, is the most active and the least impacted,” he said.
“The main reason the rate of inflation is slowing is due to an increase in supply which is down to new developments coming on stream.”
He also noted the number of buy-to-lets being offered for sale as landlords continue to exit the rental market.
Mr O’Sullivan, who is a Director with Lisney estate agents in Dublin, said another factor was that in some cases asking prices have been set too high based on vendor and agent expectations.
“If prices are pushed beyond buyers’ ability to pay, its inevitable prices will come back,” he said.
“That said, the market is reasonably active and one of the main challenges the sector faces is the time it takes to close a sale due to the protracted legal process.”
He added: “Agents report that for every three investors selling only one investor is buying, which given the very low levels of supply, particularly in urban areas, is not good news for the rental market.”
In Dublin, price rise expectations have actually increased from 2pc to 3pc for the coming year.
But over a three-year period, expectations of price rises fell from 6pc to 5pc.
Survey respondents in the capital viewed the construction of new units and the Central Bank’s mortgage lending rules as the joint primary factors for this.
The SCSI/CBI survey is a sentiment survey of chartered auctioneers and estate agents as well as industry stakeholders such as economists, market analysts and academics.
It comes weeks after the Irish Independent/Real Estate Alliance (REA) Average House Price Index also revealed signs of prices slowing.
Overall, the price of a semi-detached house in Dublin averages €443,333, which is well above the generally accepted maximum borrowing range of up to €320,000 for a dual-income couple with average salaries.