Property prices up but Dublin falls again

House price trends have continued to fly in the face of logic as values across the country rose while those in Dublin fell throughout July.

The capital had been expected to lead the recovery, having been the first region to record a pick-up early this year, and where auctioneers reported the greatest level of pent-up demand.

However, in July, prices fell by 0.2%, representing the second monthly drop of the summer. Across the country as a whole, the value of property trades rose by 0.2%, helped by a 0.3% rise for all counties outside Dublin. The results mean Dublin house prices have fallen 57% since the peak of the boom, compared with 47% everywhere else.

The results from the CSO came in tandem with the release of fresh census data on the volume of people renting their homes rather than buying them.

In 2011, there were 120% more people renting from private landlords than in 2006. Overall, 474,788 were in agreements with landlords compared to 323,007 five years earlier. Over the same period, the number of people with mortgages fell.

The two sets of data confused market analysts who were expecting a more sustained uplift in Dublin coupled with a continued decline in other regions.

Conall Mac Coille, chief economist at Davy, said the figures related to a period of low mortgage lending and were based on a very low level of transactions.

“We retain our view that repossessions will have to rise, and coupled with weak mortgage lending and a slow recovery in the economy, house prices will fall further.

“[The data] highlights that in a dysfunctional property market prices may rise, given weak supply.”

His view was supported by Alan McQuaid of Merrion Stockbrokers.

“We don’t see a major improvement in the housing market until there is clear evidence that the jobless rate has peaked and is on a sustained downward trend,” he said.

“Furthermore, the uncertainty of how a proposed property tax will be calculated is also likely to weigh negatively on house sales/ prices in the run-up to December’s budget.”

Myhome.ie said the trend in Dublin versus the rest of the country had not been expected.

“To be honest we are a little surprised by the figures,” said the website’s managing director Angela Keegan.

“While we welcome the recent trend towards moderating price falls and greater price stability, the overall increase in prices and also the modest fall recorded in Dublin for July was unexpected. The picture we are seeing on the ground is of supply shortages in certain urban areas and rising rental prices.

“Conversely the situation with regard to newer developments in rural locations is one of excess supply and large price falls.”

* Click HERE to view a graphical summary of the Irish housing situation as of July 2012

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