House prices surge 15% but Dublin slows
However, CSO figures show the rate of growth is slowing in Dublin, with property consultants suggesting the market may be entering a new phase of more moderate growth.
Residential property prices rose 1.8% in September, compared with an increase of 2.3% recorded in August. While Dublin’s property prices rose 2.5% in September and are 23.4% higher than a year ago, the changes reflect a slowdown from the 25.1% year-on-year growth recorded last month. Outside the capital, prices rose 7% against the same period last year, and grew 1.1% in the past month.
Savills Ireland director of research John McCartney cautioned against reading too much into one month’s data and noted that the overall rate of house price growth remains very high. He said recent measures announced in the budget should also lead to a more sustainable growth.
“Last week’s budget could have done more to kickstart house building, for example cutting the VAT on new homes to 9% would have reduced construction costs,” said Dr McCartney.
“However, taken together, the package of measures announced by government in recent months should significantly help to boost supply, leading to more sustainable price growth.
“The proposed lending restrictions will undoubt-edly impact on affordability and this is likely to drive buyers further afield in the search of affordable properties.”
While he suggested the recent loan-to-value and loan-to-income limits introduced by the Central Bank may see buyers look outside Dublin for affordable homes, Dr McCartney warned the measures need to be finely judged to ensure the bar is not set too high for the first-time buyers.
“Prudent lending and borrowing is in everyone’s interests,” said Dr McCartney.
“However, under the proposed rules first-time buyers purchasing the average Dublin home would have to save a deposit of up to €70,000. Given that incomes are only growing sluggishly, this may be an unrealistic target for many.”
The national index is 39.9% lower than its highest level in 2007.
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