Rise in cost of houses slowing, says CSO

The rise in the cost of homes has slowed considerably over the past year, according to figures from the CSO.

Residential property prices are up 8.9% in September compared to the same time last year — the slowest annual rate of increase since June 2013.

Dublin prices were 6.5% higher last month than the same time last year while those outside of the capital were up 11.4%.

The annual growth rate has now slowed for six months in a row.

Yesterday’s figures show that residential property prices rose by 1.3% in September while Dublin prices rose by 0.9% in September compared to August.

Outside of Dublin, residential property prices rose by 1.6% in September on a monthly basis. Prices are up 11.4% compared with September of last year.

Overall, residential property prices remain 34.6% lower than their peak level in 2007.

Dublin house prices are 33.7% lower than their peak, while Dublin apartment prices are 40.7% off their highs seen in 2007.

Outside of Dublin, residential property prices are 37.7% lower than their highest level in 2007.

Commenting on the figures, Property Industry Ireland, the Ibec group that represents businesses working in the property and construction sector, warned that the slowdown in house price inflation is masking a housing shortage in many parts of the country.

“The last few months have been relatively stable for house prices, with fairly consistent low-level growth,” said Property Industry Ireland director Peter Stafford.

“The moderation in house price growth in Dublin is largely driven by reduced borrowing capacity because of new Central Bank mortgage rules. While this lending policy is positive, in that it reduces the exposure of households to future fluctuations in prices, it masks the underlying crisis in the housing sector.

“Between January and August 2015, there were 29,916 housing transactions nationwide, compared to 23,626 in the same period of 2014 and 16,462 in January to August 2013. Population growth, demographic trends, as well as internal migration will lead to increased transactions into the future so it is vital that people looking to move house have a genuine choice of affordable accommodation.

“There is a severe shortage of accommodation to rent in many urban areas, and a lack of affordable housing to buy. It was disappointing that the Budget did not put any measures in place to stimulate new development, nor does there seem to be a strategy to help achieve a supply-demand balance over the longer-term. Ireland still needs a national property strategy and a vision for success in housing,” he said.

Investec economist Philip O’Sullivan said prices have been rising outside Dublin at a faster pace than in the capital for the past three months.

Alan McQuaid from Merrion Economics said that the new lending restrictions imposed by the Central Bank have weighed heavily on the residential property market this year.