Stamp duty may need to rise to prevent housing bubble

An analyst who predicted the property crash has warned the Government may need to increase stamp duty to prevent another housing bubble.

The warning from Frank Quinn of the Blackrock Further Education Institute comes as a study conducted by sales website Myhome.ie states property sales for the first half of 2014 were up 39% on last year. The study follows a report from the Central Statistics Office which found residential property prices rose 12.5% in the year to June.

“The problem is that bubbles happen all the time, and the time to stop a bubble is at the initial stage,” Mr Quinn told RTÉ, adding that the Government may have to make a “difficult decision” to increase stamp duty to drive investors out of the market in favour of owner-occupiers.

The myhome.ie study, based on analysis of the Property Price Register, says there were 15,864 sales across the country between January 1 and June 30.

There were 5,240 sales in Dublin alone between January and June — an increase of 32% on the 3,966 sales recorded for the same period last year. The amount of money spent on property in Dublin rose by 46% to €1.8bn.

There was a total of 1,694 property sales in Cork during the same period, while Galway (851), Kildare (649) Wicklow (537) and Meath (525) followed.

Terenure was the capital’s biggest selling area, with 178 of Dublin’s 5,240 sales taking place in the Southside suburb.

Of Cork’s 1,694 sales, which saw €275.1m spent, 336 were in the city, with the rest elsewhere in the county.

Every county in the country saw sales figures rise according to the study, while the amount of money spent on property in each of the 26 counties was up in all of them bar Carlow, where the amount spent fell back by 8%. The authors suggest that this was influenced by the one-off sale of Oakley Wood in Tullow for €2.1m back in March 2013.

Angela Keegan, managing director of myhome.ie, said the study was evidence that confidence is returning to the property market.

According to the study the biggest percentage increases were recorded in the midlands and western areas. Cavan led the way with sales up 114%, though the report’s authors believe that this was helped significantly by the sale of 43 properties in a development in Cavan town. Other counties that recorded notable sales growth were Kilkenny (68%), Offaly (67%), Laois (62%), Mayo (57%), Sligo (50%), and Westmeath (49%).

The counties with the lowest number of sales were Monaghan (141), Leitrim (145), Longford (152), and Carlow (157).

The most money was spent in Dublin (€1.8bn).