The Government’s ‘help-to-buy’ scheme has contributed to a €24,000 surge in house prices in three months, according to a new report, writes Eoin English.
And house prices look set to keep rising amid warnings that the likely abolition in the forthcoming budget of the rebate scheme could trigger a surge in demand against the backdrop of an ongoing shortage in housing supply.
The property report from MyHome.ie, in association with Davy, shows the mix-adjusted price on newly-listed properties — seen as the most reliable indicator of future price movements — surged 5% in the second quarter, up almost 9% on the year.
In Dublin, prices rose by 2.8% and are up 10.3% year-on-year.
The mix-adjusted asking price for new sales nationally is now €251,500, up over €24,000 in the last six months. The figure for Dublin is €360,000, a €32,000 increase.
For the entire stock of properties listed for sale on MyHome.ie, prices rose 2.8% nationally and 3.2% in Dublin. The national mix adjusted figure is now €224,500 while in Dublin it’s €313,500.
Report author and chief economist at Davy, Conall MacCoille, said the available evidence shows the help-to-buy scheme has had a significant impact on the housing market, and has contributed to the rise in prices.
“The price of newly-built homes is rising much faster than existing dwellings. Of course we have also seen a pickup in lending — in the first quarter, the average mortgage loan to first-time buyers rose by 9.5% to €194,000 — and this must in part reflect the relaxation by the Central Bank of mortgage lending rules late last year,” he said.
“The likely demise of ‘help-to-buy’ could lead to a rush of transactions in 2017 as first-time buyers move quickly to avail of the scheme and to a slowdown in 2018 as it is phased out.
“Nonetheless, the bigger picture is that Irish house price inflation should remain robust, driven by the recovering economy.”
MyHome.ie managing director, Angela Keegan, said the ongoing lack of housing supply means houses are being snapped up quickly by desperate buyers and that competition for properties will intensify for the rest of the year.
“There were only 21,000 homes listed for sale on MyHome in Q2, down over 11% on the year,” she said.
“This means that just 1% of Ireland’s housing stock of two million homes is currently listed for sale. In Dublin where demand is greatest, fewer than 4,000 homes or 0.85% of the capital’s stock is listed for sale.”
This story first appeared in the Irish Examiner.