Prices reveal two-tier property market

A two-tier property market in Ireland is emerging, with house prices rising or stabilising in Dublin but continuing to drop in cities and towns outside of the capital.

Two reports published today provide slightly different results about the property market in Dublin but show prices have begun to climb in some areas of the city.

Research by Daft.ie claims general asking prices in Dublin have increased by 0.5% over the past year, while similar research by Myhome.ie found average asking prices in Dublin fell by 4.8%. Nevertheless both studies agree that prices have stabilised in the capital.

The reports also highlight how house prices in the rest of the country are still falling — by double-digit percentages in several counties, including Kerry, Waterford, Galway, Mayo, Laois, and Leitrim. Prices in Cork City are down 9.8%, and 8.9% in the county.

However, the overall decrease is moderating; the latest drop is the lowest annual rate of decline in five years.

Daft.ie said asking prices nationally have fallen 6.6% over the past year, while Myhome.ie calculates the decrease at 9.8%. The average asking price for property nationally is now €171,000 according to Daft.ie, almost 55% below the peak of €378,000 during the boom. Myhome.ie puts the average asking price nationally at €197,000.

The author of the latter report, Annette Hughes of DKM Economic Consultants, said the local property tax would place increasing demands on disposable incomes.

Combined with the Government’s efforts to tackle the problem of mortgage arrears and difficulties with access to mortgage finance, Ms Hughes predicted there could be further downward pressure on house prices as more properties are likely to come on the market.

“This development together with a difficult budget later in the year would suggest property prices are likely to remain volatile through 2013,” she said.

Daft.ie economist Ronan Lyons said national averages concealed huge differences in the property markets around the country.

He pointed out that asking prices in south county Dublin are up 6% compared with last year — a rate of increase not recorded since early 2007.

The findings suggest a strong pick-up in the more affluent parts of Dublin, where asking prices have now risen in four of the last five quarters, after almost five years of constant decline.

Myhome.ie claims stock levels in Dublin are down 41% over the past year, causing a major supply issue with the potential to create “falsely inflated prices” in some areas.

Mr Lyons said the gap between house prices in Dublin and elsewhere is growing. He claims this has huge implications for the Government in terms of policy on housing density.

He warned of a possible housing shortage in parts of Dublin as a result of first-time buyers no longer being prepared to travel long distances for work, instead availing of cheaper property.

“If areas close to jobs and other amenities need new homes, hoping that even more sprawl will solve the problem is not a viable option,” said Mr Lyons.

“Density works well elsewhere — it can work in Ireland, too.”

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