THE LATEST HOUSE price report from Daft.ie shows that prices rose over the summer in every single one of the 54 areas monitored.
An analysis by the website also showed that, in the year to September, prices rose an average of 7.6% across the State. This figure comes from a 5.3% price increase in Dublin and an increase of 9.3% elsewhere.
Significantly, the figures show that while the Central Bank’s lending rules have until now kept a lid on spiralling prices in Dublin, a lack of supply in the capital means prices are now beginning to increase faster.
The average asking price for a house in Dublin is now €322,934.
Prices are increasing at a faster rate in cities than in rural areas with Waterford City seeing the sharpest increase of anywhere at 16.4%.
Commenting on the price rises, TCD economist an author of the report Ronan Lyons described the figures from Dublin as “particularly worrying”.
“This does not reflect the failure of the Central Bank rules. Rather, it reflects the underlying reason the rules were introduced in the first place,” he says.
The rules were brought in to limit the potential for a severe imbalance between strong housing demand and very weak supply to damage the wider economy. However, those rules can only prevent damage through the financial system a credit bubble, in effect.
The Daft.ie figures show that the supply of houses has remained relatively stable since the start of the year but is down compared to last year. There were just under 24,900 properties for sale in September, slightly below the June figure and slightly above the total for March.
The stabilisation of the stock of properties for sale is partly a result of an increase in new builds but Lyons points out that such increased activity is not happening quickly enough.
Another indication of the rapid rise of house prices is that the gap between asking prices and sale prices is also increasing.
One year ago, houses were being sold for an average of 1.5% higher than their asking prices but now this gap has risen to 2.2%.
Despite the rises in houses prices, more and more people are actually buying homes. For example, the number of new homes sold in Dublin in the first half of 2016 was 63% higher than in the first half of 2014.
It is for this reason Lyons argues that budgetary measures aimed specifically at first-time buyers would be a mistake as it could lead to a situation where more first-time buyers are bidding against one another.
“Politically, it may be necessary to be seen to be doing something to help first-time buyers,” he says.
“However, once the budget passes, it will be time to focus on the far more important business of lowering construction costs in order to make new homes affordable for those on average incomes.”
Consistent
A report released by MyHome.ie today showed that the number of homes for sale has fallen and that homes are selling faster.
The stock of homes listed for sale fell to 22,919, down 6.7% on the year. The average time to sale agreed also declined to a fresh low of four months.
A report from Sherry FitzGerald, Ireland’s largest estate agents, found that the average value of residential property in Ireland rose by 1.2% in the third quarter of 2016.
Commenting on the price performance, Marian Finnegan, Chief Economist Sherry FitzGerald said; “The level of price inflation in the year to date was largely consistent with the same period in 2015, but unfortunately this stability once again masks some very significant indicators of a market in crisis”.
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