Property prices in capital up over 12%

Fears of a fresh bubble in the housing market in Dublin have increased with new figures that show property prices there rose 12.3% over the past 12 months.

The latest residential property price index published by the CSO show that the property market in Dublin recorded growth not seen since the peak of the Celtic Tiger, with prices up 3.9% alone last month.

Overall, house prices nationally have risen by 3.6% over the past year. However, the rise is driven solely by price increases in the capital confirming the existence of a two-tier property market.

Outside Dublin, residential prices are continuing to fall, despite an increase in the number of actual transactions.

Property prices in Ireland excluding Dublin have shrunk by 2.6% since Sept 2012, with prices down 0.1% last month.

The downward trend in national house prices excluding Dublin has continued uninterrupted since 2007, although the pace of decline has slowed considerably in the past year.

In Dublin, the demand for houses, especially three-bed family homes, is seen as a key trigger for the strong upward growth in house prices over the past year.

Estate agents claim there is a shortage of such properties coming on the market due to a large number of homeowners trapped in negative equity combined with low levels of new housing construction activity.

Property prices in Dublin have now recorded year-on-year growth each month since January.

House prices in Dublin soared 4.2% last month and are now 12.2% higher than a year ago. Similarly apartment prices in Dublin have jumped 11% over the past year — including a 1% increase in September.

Nevertheless, house prices in Dublin remain 49% lower than at their highest level which was recorded in early 2007. Apartments in the capital are still 59% below their peak rates.

Elsewhere, the average price of residential properties outside Dublin is somewhat lower at 48% below its highest recorded level.

Goodbody Economics said the latest figures showed Dublin was leading acceleration in house prices last month. However, it noted that the overall level of house sales remained “steady but subdued”.

The CSO figures are compiled using data on mortgage drawdowns provided by the eight main mortgage lending institutions but excludes cash-based property sales.