That’s how much house costs rose by as numbers slump again
HOUSE prices are rising by almost 10% nationwide as the supply of homes for sale hits a new low, leaving the average price at over half a million euro in up-market areas.
With demand so high, the vast majority of residents sell within four months, according to the latest Daft.ie House Price Report.
The national average price in the first three months of the year was €230,000: that’s 9.4% higher than last year and over €65,000 higher than its lowest point. But the average price ranges widely between €548,008 in south Co. Dublin and €116,843 in Longford.
Despite the demand, the number of houses for sale around the country actually fell by almost 4,000 over the year from almost 24,000 to 20,500. That’s the lowest figure since October 2006 and is down two-thirds (67.4%) from the October 2008 peak of almost 63,000.
Ronan Lyons, economist at Trinity College, Dublin, and author of the Daft.ie Report, said: ‘The combined effect of the tweaks to Central Bank mortgage rules and the new help-to-buy scheme has been to stimulate first-time buyer demand. This is seen in renewed house price growth, particularly in and around the major cities. While there may have been a political motive to these measures, it is important that the chronic lack of construction activity becomes the main focus for policymakers.’
The report’s authors say up to 50,000 new homes are needed every year but only a quarter of that number, at most, have been built in recent years. ‘It is unfortunate that the primary focus of policy efforts late last year, when it came to the housing market, was to further stimulate demand and prices, rather than supply and quantities,’ said Dr Lyons, Assistant Professor in Economics at Trinity, in his foreword to the report.
House prices had been rising at a rate of 15% but two years ago they started coming down, thanks to rigid Central Bank mortgage rules. But after reaching 6.1% early last year, they are up again, to 9.4%.
After two years of slow growth in Dublin, the average price rose by €17,500 in the first three months of this year, and by €120,000 in the last five years. The rate of price rises increased from 1.2% in early last year to 8.7%.
In the four major cities nationwide and Leinster, the average price of a house rose by €10,000. In these regions, prices have risen by 50% or more in the last few years.
Outside cities in Munster, Connacht and Ulster, prices have risen by 30% since the start of 2014.
House price inflation has ‘reemerged as a problem’ in Leinster which is ‘consistent with the obvious consequence’ of the significant stimulus to demand given late last year. Both the change in mortgage rules for first-time buyers and the help-to-buy scheme have made it easier for first-time buyers to bid higher prices, the report states.
A survey of over 1,000 ‘property market participants’ found that two thirds of respondents believe scarcity of supply will drive prices up in the near future. The next most cited factor is availability of mortgage credit (cited by 43%).
The housing stock in Dublin is ‘tight’, according to the report. There were just 2,700 properties for sale there in December, the lowest since the first half of 2014.
Transactions were down 2% and
Despite demand there were fewer for sale
80% sold within four months. ÷In north Co. Dublin, the average price was €292,889, up 10% from the same time last year. ÷In west Co. Dublin, the average price was €287,973, up 7%. ÷In south Co. Dublin, the average price was €548,008, up 5.4%. ÷In north Dublin city, the average price was €309,887, up 9.2%. ÷In south Dublin city, the average price was €373,798, up 8%. ÷In Dublin city centre, the average price was €282,451 up 12.9%. ÷In Cork city, the average price of a house was €257,005 up 10.7%. ÷In Limerick city and Waterford city the average price was €174,234 and €153,448. ÷In Galway city the average price was €265,238.
All parts of Leinster, except Wicklow, continue to see annual price increases of at least 10%: they include Longford (16.3%), Westmeath (14.9%), Offaly (12.5%), Laois (11.5%), Kilkenny (13.7%), Carlow (14.4%), Louth (14.6%), Meath (12.8%), Kildare (11%) and Wexford (12.8%). The rate for Wicklow is 6.2%.
In Munster, prices continue to rise in the cities of Limerick (16.3%), Cork (10.7%) and Waterford (13.9%) but growth in other parts of the province is more muted eg, Kerry (3.6%), Clare (5.4%), Tipperary (4.2%) and Limerick county (5.4%). Almost half of all properties in Munster find a buyer within four months. Transactions were down 1% compared to 2015. In Connacht-Ulster, there was record low availability but prices continue to rise across the region. Transaction volumes were down 7% and more than half sell within four months.
Property prices in Galway are up 16.3% from the same time last year. However, all parts of ConnachtUlster continue to see strong growth particularly in Sligo (10.9%), Mayo (10.5%) and Roscommon (12.7%).
‘Focus on the chronic lack of construction’