Property prices rise by 7% in 12 months according to CSO figures

Property prices rose over 7% in the year to January, although prices had been mainly static for the past six months.

Central Statistics Office (CSO) figures show a jump of 7.6% in the year to the end of January.

They compared with an increase of 6.6% in December and an increase of 15.5% in the 12 months to January 2015.

Residential property prices fell by 0.5% last month compared to an increase of 0.5% in December and a decrease of 1.4% recorded in January of last year.

In Dublin, house prices were down 1.1% in January but 3.2% higher on a yearly analysis.

House prices in the capital rose on an annual basis for 37 months running.

Dublin apartment prices were 4.8% higher when compared with the same month of 2015.

However, the CSO said the data was based on low volumes of observed transactions and consequently suffer from greater volatility.

Residential property prices outside Dublin are up 0.1% on a monthly basis. Overall, residential property prices are still down 33.8% from the height of the boom in 2007.

Commenting on the figures, Alan McQuaid of Merrion Stockbrokers said a lack of supply of houses had clearly pushed up prices, particularly in the Dublin area in the past three years but that an improvement could be expected in the next year or two.

“The pick-up in planning permissions, albeit from historically low levels, should also help to dampen house prices over the next year or two. Lower prices will be welcomed by IDA Ireland.

“The agency has had some difficulty in attracting new foreign direct investment into the country because of soaring commercial and residential property values,” he said.

Mr McQuaid predicted a more modest growth in house prices over the next 12 months.

The generally better economic backdrop, particularly in relation to the labour market, should see house price growth remaining in positive territory on a year-on-year basis for a while, yet even with credit restrictions and increased planning permissions.”

“Following an average increase in house prices of 12.9% in 2014 and 10.6% in 2015, we are looking for a more modest increase of 3% to 4% in 2016, with the biggest gains coming outside Dublin,” he said.

Investec economist Philip O’Sullivan predicted prices beginning to rise further as the impact of the Central Bank mortgage lending rules becomes apparent.

“We continue to reiterate that as housing output is running at circa 50% of new household formation we would expect to see prices beginning to tick higher once the impact of the Central Bank mortgage lending rules, introduced in February 2015, washes out of the data,” he said.

Meanwhile, new figures from the Banking & Payments Federation of Ireland show that the average number of mortgage approvals fell by over 10% to 2,133 between November of last year and last month

On a yearly basis to January, mortgage approvals fell by 15%.