Residential property prices rose by 13 per cent in the year to April, according to the latest figures from the Central Statistics Office (CSO), the fastest pace of growth in three years. However economists suggest that as the Central Bank lending rules kick in, the pace of growth should start to ease.
Prices in Dublin increased by 12.5 per cent in the year to April, with house prices rising by 11.7 per cent and apartments by 15.9 per cent in the same period.
The highest house price growth in the capital was in the city centre, at 14.9 per cent. The lowest growth was in south Dublin, where house prices increased by 6.9 per cent.
Residential property prices in the rest of the State were 13.6 per higher in the year to April. House prices outside the capital rose by 12.9 per cent over the period.
The Mid-West region showed the greatest price growth, with house prices increasing 18.7 per cent. The Border region showed the weakest price growth, with house prices rising 9.3 per cent.
Apartment prices in the rest of the Republic increased by 17.8 per cent in the same period.
Rachel McGovern, director of financial services at Brokers Ireland, said the price rises are being fuelled by “massive pent up demand for homes”.
“While those with deep pockets are winning in this high demand low availability market, those on average incomes are seriously disadvantaged,” she said.
But relief for home buyers could be on the way.
David McNamara, economist with Davy, says that lending restrictions on how much putative home buyers can borrow will start to quell price growth.
“A lack of supply and rising leverage have been the key drivers of house price inflation to date, but the Central Bank rules will soon begin to bite in greater Dublin – curtailing the pace of inflation,” he said.
Irish house prices are still growing at the fastest rate in Europe, with the latest Eurostat release showing that Irish house prices are rising more than twice as fast as the average increase across the EU, of some 4.5 per cent in late 2017, while UK figures published on Wednesday show price growth of just 3.9 per cent in the same period.
“In part, this reflects the broader strength of the Irish economy,” said Austin Hughes, economist with KBC Bank.
It also however reflects the fact that Irish residential construction, as a share of overall economic activity, falls well short of the EU average. According to Mr Hughes, the 2017 outturn at just below 2.5 per cent of GDP was the third lowest in the EU. It should be closer to 4 per cent Mr Hughes added. This means “a serious shortfall in supply”
The CSO said the national index is 21.1 per cent lower than its highest level in 2007. Dublin residential property prices are 23.3 per cent lower than their February 2007 peak, while prices in the rest of the State are 26.1 per cent lower than their May 2007 peak.
Since early 2013, prices nationally have increased by 76 per cent. Dublin residential property prices have increased 90.1 per cent from their February 2012 low while prices in the rest of the State are 69.9 per cent higher than in May 2013.
REF: Irish Times