Dublin demand pushes home prices up 5.6%

Prices of homes for sale rose by 5.6% in the past year, but the increase in values was entirely due to a surge in demand for properties in Dublin.

Residential property prices in Dublin jumped 13.8% in the year to the end of November, which boosted the national average. But if Dublin is excluded, prices nationally fell by 0.6%.

However, a sign that the opposing trends might begin to move in the same direction is the fact that there was no fall in prices outside of Dublin in November.

Emmet Gaffney, of Investec economic analysts, said the figures showed the two-tier nature of the market, which emerged earlier this year, remained its key characteristic.

“Dublin prices continue to rebound strongly while prices in the rest of the country remain in the stabilisation phase,” he said.

He sounded a note of caution about the Central Statistic Office figures, pointing out they are compiled from mortgage providers’ lending records and so exclude cash transactions, which can make up half the total market.

The figures are even more striking in the market for apartments in Dublin, where prices jumped 20.7%, although the CSO cautioned that this statistic was based on a very low number of transactions.

Mr Gaffney said the main factor driving the contrasting experiences in and outside Dublin was supply.

Even with the recent increases, all markets have a long way to go to get back to anything close to the prices properties commanded at the peak of the boom.

House prices in Dublin are 47.5% lower than they were in early 2007 and apartments are 56.1% lower. Nationally, excluding Dublin, prices are 46.9% down on the peak.

But while prices might still represent good value at the moment, figures from the Irish Banking Federation show the number of mortgages approved fell 7.9% in the 12 months to the end of November.

A telling statistic though is that the value of mortgages approved fell by just 3.5%, so the average mortgage approved is for a higher price home than previously.

Mr Gaffney said the strength of the price growth figures was welcome news for the banks which would be hoping the upward momentum continued as they faced into their next stress test by the European Central Bank in the new year.


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