Dublin house prices up 22% in past year

The price of houses in Dublin has risen by more than 22% in the past year, double the national average. It’s the fastest rise since the peak of the property boom in 2007.

Nationwide, residential property prices increased by 10.6% in the year to May, new figures from the Central Statistics Office (CSO) show.

The national figure compares with an increase of 8.5% up to April and a fall of 1.1% recorded in the 12 months to May 2013.

Residential property prices rose by 2.3% in May, compared to 1.4% in April and an increase of 0.3% recorded in May of last year.

Dublin residential property prices increased by 4.2% in May and were 22.4% higher than a year ago, while the price of homes outside of the capital rose by 0.6% last month and are up 1.8% on an annual basis.

Dublin apartment prices were 19.5% higher when compared with the same month of 2013 but the CSO warns that this figure is based on low volumes of sales and that greater volatility can be expected in this area. Despite the recent increases, the CSO said that residential property prices in Dublin were still 44% lower than their highest level in early 2007.

The price of residential property in the rest of Ireland is 47% off the peaks reached in 2007.

Douglas Newman Good (DNG) estate agents’ latest House Price Gauge report noted that the average re-sale price of a Dublin house now stands at €329,719, reflecting an annual increase of €62,000 or €5,000 each month. DNG chief executive Keith Lowe said: “Property prices in the capital were always likely to rebound quickly, as they fell too fast and too far.”

However, according to DNG, the lack of supply in the property market is continuing to drive prices in Dublin.

Conall MacCoille, chief economist at Davy Stockbrokers echoed this view warning that incentives to attract cash buyers could see prices rise beyond the capacity of those seeking a mortgage.

“Cash buyers continue to account for over 50% of transactions in the market.

“The lack of new housing supply, rising rents, confidence in long-term economic growth prospects, together with favourable tax incentives and low interest rates, have enticed cash investors back into Ireland’s housing market — pushing up prices. However, cash buyers are unlikely to be a sustainable source of demand.”

Commenting on the CSO figures, Mr MacCoille said: “Ultimately, we would expect regulatory authorities to take action to ensure house price inflation and mortgage lending are anchored by earnings growth and affordability.”

“Although aggregate lending figures remain weak, today’s data could raise alarm bells at the Central Bank that first-time-buyers are increasingly stretching their finances in Dublin, exposing themselves to future increases in ECB interest rates. Affordability is clearly being stretched, with average earnings growth in the Irish economy still close to zero.”