House prices rise over 12% in the year to May

House prices rose by 12.4% in May and by almost 11% over the last year but the rate of growth is slowing, new data show.

The Residential Property Price Index, published yesterday by the Central Statistics Office (CSO), also shows that while house prices have increased by 77.7% since the trough in early 2013, the national index is still 20.4% lower than its peak in 2007.

The latest figures show house prices increased 12.4% in May compared to a 13.5% rise in the year to April and up 10.9% in the 12 months to May 2017.

In Dublin, residential property prices increased by 10.7% in the year to May, with house prices in the capital up 10.3%, and apartment prices up 13.5% in the same period.

The highest house price growth was in Dublin city, at 14.6%. By contrast, the lowest growth was in south Dublin, where prices increased by 6.6%.

Residential property prices in the rest of Ireland were 14.1% higher in the year to May, with house prices increasing 13.7% over the period. The mid-west region showed the greatest price growth at 22.1%, while the border region showed the least price growth at 3.7% which observers have linked to uncertainty around Brexit.

Apartment prices in the rest of Ireland increased 15.5% in the same period.

The CSO said overall the national index is 20.4% lower than its highest level in 2007, with Dublin residential property prices 22.5% lower than their February 2007 peak, while residential property prices in the rest of Ireland are 25.5% lower than their May 2007 peak.

The Institute of Professional Auctioneers and Valuers said the pick-up in prices in areas like the mid-west was evidence of an improving economy.

However, the institute’s chief executive Pat Davitt said the slowdown in house price inflation in south Dublin indicates that availability of supply is impacting the rate of inflation.

“However, the substantial drop in inflation in the Border region from 9.3% in April to 3.7% in May is clearly linked to Brexit and the adverse impact the uncertainty is having on confidence in the region,” he said.

“I expect that the current trend we’re seeing of a slowing in Dublin and a pick-up elsewhere is set to continue but there is a myriad of factors at play, as we’re seeing, including also more second-hand stock being released,” he said.

Brokers Ireland, which represents almost 1,300 broker firms, also said while supply in Dublin is moderating the rate of increase, there is huge pent-up demand. Its director of financial services Rachel McGovern said CSO data show just 14,446 new dwellings were completed in 2017.

“On that basis, last year’s supply level would need to increase by well over 176% to satisfy current yearly demand,” she said.

“The market is not healthy with many young people already priced out, having difficulty acquiring the level of deposits needed and being forced to pay very high rents for extended periods.”

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