IRISH PROPERTY PRICE inflation sped up late last year – and the trend is expected to continue after the loosening of the Central Bank’s mortgage lending rules and the introduction of the government’s first-time buyer scheme.
According to the CSO’s latest Residential Property Price Index, house prices rose by 1.5% across Ireland in November. In the year to the end of the month, residential property prices increased by 8.6%, compared to an increase of 6.9% in the year to October.
The jump was most pronounced outside the capital. In Dublin, residential property prices increased by 5.9% in the year to November. Prices in the rest of Ireland, excluding Dublin, were 12.8% higher during the same period.
Davy analysts said that there is now a real possibility that house prices will rise by more than 10% across the country in 2017.
Double-digit inflation
In a note published this morning, Davy chief economist Conall Mac Coille said with house price inflation “now in double-digit territory across most regions of Ireland, a gain exceeding 10% in 2017 now looks like a distinct possibility”.
“Ireland’s tight housing market and robust economic recovery are already driving sharp price rises, with the government’s help-to-buy scheme and looser Central Bank lending rules likely to further stimulate house price inflation in 2017,” he said.
The help-to-buy scheme, which was announced by the government during Budget 2017, will give first-time buyers a grant that could be worth as much as €20,000.
Shortly afterwards, the Central Bank announced that it would ease the deposit requirements for first-time buyers saving for more-expensive properties.
Buyers previously needed to save deposits worth up to 20% of the purchase price, but they will now only need to come up with 10% to put towards their purchases.
Acceleration
Mac Coille said that Irish house price inflation “has accelerated significantly with prices up by an enormous 1.5% on the month”.
“This all comes ahead of the government’s help-to-buy scheme and the loosening of the Central Bank mortgage lending rules – which will surely push price inflation higher still next year,” he said.
“We had forecast an 8% house price gain next year, but today’s data suggest double-digit house price inflation in 2017 is a distinct possibility.”
The Central Statistics Office property price index, which is based on Revenue stamp duty returns, found that the found that the national index remains 31.5% below its highest level in 2007.
Written by Paul O’Donoghue and posted on Fora.ie
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