COULD THIS BE THE FIRST SIGN OF A SLOWDOWN?

The latest survey suggests the brakes are being applied to house prices in some Dublin areas. While values rose rapidly for the first half of 2017, the rate of increase dropped in the second part of the year, writes Fran Power

COULD we be seeing the first signs of a slowdown in property prices? That is the question raised by the latest research from a nationwide survey, released today exclusively in the Sunday Independent.

The research is based on average sales achieved for three types of housing over the second half of 2017 — two-bed apartments, three-bed semis and four-bed semis, — and was carried out by IPAV, the Institute of Professional Auctioneers and Valuers.

This report, entitled the Residential Property Price Barometer, shows that in some areas of Dublin, price increases have been minimal, hovering at around 1pc.

For instance, the price of a three-bed semi in leafy Dublin 4 increased by just over 1pc in the second half of last year, while prices for the same house type in North County Dublin and Dublin 15 rose by just 0.99pc and 1.99pc respectively.

In South County Dublin, price increases have also slowed for both two-bed apartments and four-bed semis, though overall this remains the fourth most expensive Dublin district recorded. Two-bedroom apartments increased to €348,750, an increase of just 2.5pc.

The figures confirm the research released by property website Daft.ie earlier this year, showing that although there had been rapid price inflation of 8.8pc across the country for the first six months of 2017, the latter half recorded increases of just 2pc.

However, today’s report also shows that prices continued to increase at double-digit rates in five other areas of the capital, as well as in 12 regional counties over the same period.

Commenting on the findings, Pat Davitt, CEO of IPAV, pointed to the Help to Buy scheme introduced in January last year as having had a knock-on effect in stimulating construction: “There is more stock being built, so I think that prices are slowing down slightly.”

In general, Davitt believes the figures indicate that more supply does help to taper house price growth. “The low rates of price increases for two-bed apartments and four-bed semis in South Dublin where new developments have come on stream certainly supports that.”

PRICIEST HOMES

It comes as little surprise that Dublin 4 is the most expensive place to buy a four-bed semi at €1,375,000, but again, price increases rose by half the national average at 5pc over the first half of the year. Dublin 2 saw larger percentage increases for the same house type, as prices rose by 10pc to the €1m mark. Dublin 6 had looked set to overtake Dublin 4 in terms of price in 2016, however, IPAV’s latest research shows that the redbrick stronghold has fallen back to third place, behind both Dublin 4 and Dublin 2 for two-bed apartments and four-bed semis.

Surprisingly, though, in the three-bed semi market, it does out-price Dublin 2, recording average values of €700,000 against Dublin 2’s figure of €650,000. This may reflect high demand for family homes due the number of good schools and closeness to the Luas line.

THE LUAS FACTOR

While prices in some Dublin districts were plateauing, others — particularly those served by the Luas green line — experienced double-digit increases for three-bed semis over the same period, including 17.95pc in Dublin 2, 13.93pc in Dublin 6 and 12.5pc in Dublin 7, which includes both the new DIT campus at Grangegorman and the hipsters’ beloved Stoneybatter. The average three-bed semi here cost €480,000, an increase of 12.5pc over the first half of the year.

COMMUTER BELT SPREADS

Elsewhere, too, demand continues to drive prices upwards. The push out of the commuter belt was evident, for example, as lower development and site costs continue to attract developers. Kildare outpaced other commuter counties with prices for three-bed semis rising to €280,000, an increase of 16pc, and roughly similar rises were seen for two-bed and four-bed units.

Wicklow and more particularly, Greystones, has seen a mini-boom in recent years with the launches of the long-awaited Marina Village development, Waverley and SeaGreen, all providing three-, four- and five-bedroom family homes to the area. According to one agent, property worth €34m is on the market.

While three-bed semis were averaging a more expensive €305,996, an increase of just under 10pc, four-beds increased just 6.5pc to €367,886. Only two-bed apartments show a jump of nearly 14pc to €235,510.

Meath, another popular commuter location, saw rises of 9pc to an average for a three-bed semi of €262,500.

Counties Carlow and Kilkenny showed relative value for money with average prices for threebed semis of €172,500, up just under 6pc, and €201,333, up under 4pc.

COUNTIES PLAYING CATCH UP

There is also evidence that the recovery is beginning to lift prices in the rest of the country. Cavan, Leitrim, Roscommon, Mayo and Sligo all recorded double-digit price increases. However, as Davitt points out, the areas with the strongest price rises are those that were worst hit in the crash and have been slow to recover up to now.

In 22 counties, including the larger county areas of Galway and Cork, it is unlikely that new homes will be built until the average price of a second-hand three-bed semi reaches that of a new build.

For instance, Davitt says, while Sligo experienced the fastest pace of growth in the second half of 2017 with a 25.25pc increase over the year, bringing the price of a three-bed semi to €145,000, that figure is still substantially below the cost of construction.

However, he points to schemes in Tullamore, Clare, Athlone, Mullingar and Maynooth as evidence that “prices in a number of counties around the country are getting close to those at which new homes can be built. In these areas, builders should be ramping up to satisfy the demand that will undoubtedly follow for new homes”.

REGIONAL CITIES TO BUILD AGAIN

Both Galway and Cork cities are now at price levels that make it sustainable for developers to get back into the market, and 2018 may see new supply to relieve pent-up demand.

Prices for the average three-bed semi in Galway are currently at €268,333, an increase of 13.35pc on the first six months of 2017; while in Cork city prices rose by 14pc to an average of €273,000.

In the greater county areas, prices showed much lower increases. In Galway county, in particular, the average three-bed semi achieved prices of €217,500, an increase of just 2.6pc. Cork county prices were lower at €209,444, but climbing more rapidly at a rate of 7.3pc.

AVERAGES HIDE TWO-TIER MARKET

Overall, strong demand drove prices up by an average of 10pc over the six-month period from July to December 2017. Breaking this figure down into individual house types, two-bed apartment rose by 10.8pc to €170,454, three-beds countrywide hit €278,376 and four-bed semis rose by 11pc to €345,167.

However, these figure mask the two-tier nature of the market — average prices in Dublin, for example, were nearly five times those of Longford, the cheapest county to buy. And seven counties recorded an average price of €150,000 or less.

WHERE YOUR MONEY GOES FURTHER

Longford remains the best value for money with the average property priced at just €95,000 averaged across the three types of house, while Cavan clocked a price of €119,667, and Leitrim saw prices rise to €122,222. Mayo and Sligo were also among the six least expensive counties in which to buy.

Those looking for relative bargains in the capital would do well to hunt in those areas where a large number of developments coming on stream in 2018 may help to keep prices at current levels. Castleknock, Donabate, Portmarnock and Skerries have all seen new homes schemes with more scheduled to roll out over the course of 2018, while Belcamp on the Malahide Road will bump up local supply by 900 units when complete.

IPAV’s research shows three-bed semis in Dublin 24 at an average price currently of €290,000; Dublin 1 records prices at €355,000; North County Dublin €380,000 for a three-bed semi; or Dublin 15, where the same type of property currently costs €393,333.

VALUE V PRICE

The survey also publishes useful data on price per square metre which gives buyers insight into just how much space their money can buy and allows comparison between areas on price versus size of a property.

In Ireland’s priciest postcode, Dublin 4, for example, two-bed apartments at €4,464 per sqm, are better value for money than those in Dublin 6 and Dublin 3, recorded at €5,230 and €5,816. When three-bed semis are examined, Dublin 4 comes in as second most expensive, at €6,393 per sqm, just behind Dublin 2 at €6,500.

While projections are that more new homes will launch this year, and that confidence among the construction industry has returned, there is little room for complacency on the part of policy makers. Demand is still high, and as economist Ronan Lyons points out (see opposite page), Ireland’s shifting demographics show there is no indication that will change anytime soon.