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Economic study says Dublin house prices are 25% overvalued

The Economist magazine’s latest house price index suggests that Dublin prices are way out of kilter with residents’ income.
1Source: Rollingnews.ie

A NEW REPORT suggests that property prices in Dublin are 25% overvalued against the incomes of those living there.

The latest house price index by The Economist magazine focuses on the property marked in '22 of the world's most vibrant cities'.

The study suggests that before the economic crisis city and national prices broadly rose in tandem in the studied cities. Since the crash, prices in those cities have risen on average at twice the rate of their respective countries.

Dublin's housing crisis was outlined in stark terms by the most recent Daft.ie rental report, which reported that the city's rental prices are now €500 per month higher than at the height of the boom  in 2007.

The Irish capital's position in the study however, with house prices rated 25% over household income, is actually relatively benign compared with some of the figures seen in other cities.

'Supply and demand'

Amsterdam for example is running at 49% overvalued property compared with incomes, with Hong Kong and Vancouver a striking 94% and 65% respectively.

The report outlines the reasons for what's going on with house prices in the studied cities as being 'demand, supply, and the cost of money'

However, the study also states that the global market may be at a turning point, with house price inflation slowing over the past 12 months, with sky-high prices, a curtailment on the ability of foreigners to buy property, and planning restrictions and local objections to same all combining to slow the rapid growth of prices.

It rates London as a bellwether (that is, indicative of trends generally and an indicator of where things will go) for the global housing market, given its vulnerability as a result of Brexit. "Prices seem to have climbed high enough to encourage new supply," it states. "London added 40,000 homes last year - the most for decades."

This is not totally out-of-kilter with Ireland, where the number of new homes constructed jumped this year by 30%, nearly two-thirds of which were in Dublin.

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    Mute David Corrigan
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    Nov 2nd 2018, 6:36 AM

    2189.00 EUR per month is 4.7 times the amount I pay towards mortgage every month. Frightening.

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    Mute DaisyMay
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    Nov 2nd 2018, 6:50 AM

    @David Corrigan: but to fair… it’s about what must people pay towards a mortgage in Dublin

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    Mute Genius 80s+
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    Nov 2nd 2018, 8:01 AM

    This country is out of control for prices everything is over priced and those responsible blame a free market when it’s clearly price gouging and greed.

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    Mute Paraic
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    Nov 2nd 2018, 8:23 AM

    @David Corrigan: It’s 1/3rd the price of a hotel room though.

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    Mute Marcus o Dhonnghaile
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    Nov 2nd 2018, 10:10 AM

    @David Corrigan: You probably didnt buy your house last year.

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    Mute Sean Conway
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    Nov 2nd 2018, 7:39 AM

    It will end in disaster. the government are making thing worse. with no attempt to solve the problem with a public works housing project. instead they pander to speculators and landlords.

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    Mute Brianán McBride
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    Nov 2nd 2018, 8:03 AM

    @Sean Conway: a lot in government are landlords.

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    Mute Paraic
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    Nov 2nd 2018, 8:18 AM

    @Sean Conway: By pander, do you mean target?

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    Mute Patrick Nolan
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    Nov 2nd 2018, 9:39 AM

    @Sean Conway:
    And yet they climb higher in the polls.
    I’m alright jack

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    Mute Marcus o Dhonnghaile
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    Nov 2nd 2018, 10:11 AM

    @Sean Conway: Another crash on the way. Have you got some money to buy in cheap thats what the cute gang do.

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    Mute Patrick Nolan
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    Nov 2nd 2018, 10:31 AM

    @Marcus o Dhonnghaile:
    You are right, there will be another crash, maybe soon or it could be 10-15 years away but the first thing that will happen when it does is the banks will withdraw credit and very few ordinary people will have the €150-200k+ needed to buy in cash.

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    Mute Marcus o Dhonnghaile
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    Nov 2nd 2018, 1:36 PM

    @Patrick Nolan: 10 or 15 years away ???? try two to three years for the next crash the next mini boom is 10 or 15 years away, Thats what we do here boom and bust every 10 to 15 years

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    Mute Patrick Nolan
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    Nov 2nd 2018, 2:30 PM

    @Marcus o Dhonnghaile:
    You may be right but then…
    In 1998 my father built a bungalow in the country to retire and rented his house in the town to a couple who had sold their house for a “big price” and we’re going to rent for a while and then buy back when it crashed again.
    They only stayed a year, house was two big really, so I have no idea what happened to them but I know when the crash came house prices didn’t fall to anywhere near 1998 levels.
    As regards we having a 10-15 year cycle, the previous to last crash started in the early eighties, didn’t happen again until 2008, at least 25 years later.
    Everyone can predict a crash, but anyone suggesting they know when is only fooling themselves.

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    Mute Martin Sinnott
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    Nov 2nd 2018, 6:44 AM

    Are these figures based on new rents ? If so they don’t take into account most rents payed. But it shows that new rents are dangerously way to high leading to misery for Tenants.

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    Mute mursim
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    Nov 2nd 2018, 8:36 AM

    It’s getting to the point where a few riots seem necessary.

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    Mute Robin Basstard
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    Nov 2nd 2018, 9:12 AM

    @mursim: Can’t be having a riot while X factor is on TV…the plebs haven’t time…
    Can’t be having a riot while the premier league is on TV…the plebs haven’t time…
    Can’t be having a riot while the GAA is in full swing the plebs haven’t time…
    Looks like the peasants will have to put up with being robbed because they haven’t time…to much on TV…

    This may be perceived as toxic4.4/10

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    Mute Patrick Nolan
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    Nov 2nd 2018, 2:34 PM

    @mursim:
    Your right, this democracy thing is useless, it should be decided by who has the biggest gun..

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    Mute Michael Kavanagh
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    Nov 2nd 2018, 7:20 AM

    And yet if any piece of decent transport infrastructure is proposed in an area the whinging of local home owners knows no bounds!

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    Mute Diddles Daffy
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    Nov 2nd 2018, 7:44 AM

    Keep voting them in folks

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    Mute joe
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    Nov 2nd 2018, 10:10 AM

    Sorry but it’s a free market (or at least it was). People with more money will pay more to live near the LUAS. Simple as.
    This is the way it should be!

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    Mute BAKKT-MAN XRP
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    Nov 2nd 2018, 8:17 PM

    My Wife and relocated to the UK 7 months ago best decision we ever made. Both had good paying professional jobs renting in Dublin trying to save for a mortgage. Constantly Broke and out of the house 12hrs a day. Since we moved we are now mortgage ready. What you would get in Firhouse for €345k the exact same house over here is £130k we are also mortgage ready home from work at 5.45pm every day. We feel like we have a future and time back in our lives. Dublin is over heating and will pop very soon. If I could give advise, if you can get out now before another recession hits. You don’t realise how back it is until you leave.

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    Mute BAKKT-MAN XRP
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    Nov 3rd 2018, 12:11 AM

    House prices plugging in California as fast as 2008 crash- brace yourself Dublin it won’t be long

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    Mute Paul Daly
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    Nov 2nd 2018, 9:49 PM

    give it another few years and it will be €3,360 higher per month never mind per year !

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