House prices outside Dublin have out-performed the capital for the first time since the recession began, new official figures show.
The latest property index from the Central Statistics Offices shows that although Dublin recorded a year on year increase of 9%, the growth rate was 9.6% for the rest of the country.
In 2007, house prices outside Dublin increased by 8.4% , compared to 5.5% in Dublin. On a regional basis, the out-performance continued outside the capital in July, with prices rising by 1.2%, compared to the 0.7% gain in Dublin.
Chief economist with Goodbody Stockbrokers, Dermot O’Leary, said it had been expected that prices outside the capital would rise at a faster pace because new mortgage rules were having a bigger impact in Dublin.
Despite lending curbs, property prices increased again last month. Prices rose by 0.9% nationwide in July, with the annual percentage change at 9.4%.
However, there has been a significant moderation in property price inflation since lending restrictions were introduced by the Central Bank earlier this year.
Mr O’Leary said the annual rate of inflation had slowed to 9.4% from 10.7% in June and 13.8% in May.
While prices had edged up to a “surprising” 0.9% in July, compared to 0.1% in June, further moderation was expected because of the new mortgage rules.
“We expect further moderation over the coming months, with the slowdown in price inflation to be particularly felt in the capital,” said Mr O’Leary.
He said that house price inflation continued to be supported by ongoing supply shortages.
Davy Stockbrokers said the strong price rise in July suggested that the housing market was a little stronger than some had feared but reckoned that residential property price inflation would slow towards 5% by the end of the year.
At a national level, residential property prices were 36.9% lower than their peak level in 2007, with Dublin house prices 36.3% lower.
Dublin apartment prices were 40.6% lower than their peak and Dublin residential property prices overall were 37.9% lower than their highest level. Outside Dublin prices were 39.8% lower than their highest level in 2007.
Property Industry Ireland, the IBEC group that represents businesses working in the property and construction sector, believe the slow-down in Dublin house price growth is masking an ongoing supply crisis.
Property Industry Ireland director Peter Stafford said the CSO figures show that while price increases have moderated, prices are rising faster outside of Dublin than in the capital.
“This welcome slowdown in prices is not a symptom of a healthy balance between demand and supply, but is likely caused by the impact of the new Central Bank mortgage lending policy,” he said.
“The rapid increase in rents in the same period suggests that potential purchasers are trying to raise deposits or buying outside of the capital where prices are lower,” he said.
Mr Stafford said a complete review of housing policy was urgently needed to address the needs of renters and their landlords, owner-occupiers and those faced with the threat of homelessness.
Merrion Stockbrokers economist Alan McQuaid said that a recent rise in planning permissions should also dampen house prices.
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