THE CENTRAL BANK’s mortgage lending restrictions are putting a stop to house price inflation in Dublin and surrounding areas, a new study has found. 

The third quarter report from the Real Estate Alliance (REA) found that the price of a three-bed semi in Dublin has increased by just 2.7% in the last 12 months.

The rate of increase in second-hand three-bed semis in some of Dublin city’s postcode was just 0.1% over the last three months, compared to 4.1% for the same quarter last year.

The REA Average House Price survey concentrates on the actual sale price of Ireland’s typical stock home, the three-bed semi.

After rising by 12.5% in 2017, the average price of a second-hand semi-detached house in the capital increased by just €5,300 so far this year and now stands at €443,333.

Prices in the north of the county have risen by 7.5% in the past 12 months, and 0.8% since June to an average of €322,500.

This is in contrast to south county Dublin where prices are static and have risen by just 2.4% since last September, with the average house selling for €410,000.

 “There is no doubt that the Central Bank rules are having an effect in the market, and are achieving what they set out to do in terms of keeping a lid on prices,” said REA spokesperson Barry McDonald. 

“In the Celtic Tiger years, all prices rose across the board, but in 2018 the system is actually working and the only price inflation is in a new homes market that is concentrated in pockets.

The second-hand market has become extremely price sensitive, not just in Dublin, and when we look across the country it is the areas with quality housing stock available for under €270,000 that are achieving highest growth. 

The effect of the Central Bank’s borrowing rule on price ceilings is brought sharply into focus by a drop-off in viewings for four-bedroomed housing in certain areas where they are priced over €400,000, for example.

“Many agents are attributing the lack of transaction to the fine weather in the summer, and report an upswing in activity in September.

“However, there is a defined slowdown in the annual rate of house price inflation as measured in our survey, which is the most reliable indicator of a stable market.”