House prices slow as analysis reveals 'stagnant' residential market, according to estate agents

The average value of a home in Ireland rose by 0.3% in the second quarter of this year.

House prices slow as analysis reveals 'stagnant' residential market, according to estate agents

The average value of a home in Ireland rose by 0.3% in the second quarter of this year.

This brings the growth in the year to date to 0.6% which is down from 3.2% in the same period last year, according to Sherry Fitzgerald, the country's largest estate agents.

In the capital, price growth rose by 0.1% in the first six months of this year compared to 3.3% during the same period in 2018.

Limerick recorded the highest increase so far this year with 2.2%.

Prices in Cork and Galway increased by 0.8% and 0.7% respectively.

"The latest data on house price performance reveals a continued moderation in price inflation most notably in Dublin," said Marian Finnegan, Chief Economist, Sherry FitzGerald.

The ongoing impact of a restricted mortgage market, due to the tightening of the lending policy introduced towards the end of 2017 has restricted affordability and subsequently price inflation.

"This is more notable in higher value location such as Dublin, Wicklow and the regional centres.

"This trend of low price growth is likely to remain a feature of the market."

The volume of new dwelling sales increased nationally by 2% in the first quarter of this year with an increase of 1% in Dublin, according to sales recorded on the Property Price Register.

Comparatively, second-hand sales grew 2% year-on-year and notably remained flat in Dublin in the same period.

According to Ms Finnegan, the review of the residential market reveals some interesting trends.

"The constraints on mortgage lending are effectively controlling price inflation however, they also appear to be impacting activity," said Ms Finnegan.

"On an annual basis, the volume of sales grew by a very modest 0.2% nationally and fell by 3% in Dublin. This is disappointing.

"Despite the strength of our economic performance residential activity levels remain well below norm and are now contracting in some locations.

"It is a cause for concern, as a moderation in activity may lead to a slowdown in construction activity. There is some industry evidence that the new homes market may be slowing due to issues around capacity and building controls.

"However, any reduction in activity needs to be monitored carefully.

"The underlying challenges in the industry remain and every effort needs to be made to support a significant uplift in the delivery of homes to meet the growing needs of our society."

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