Report: 2017 was a year of two halves for house prices

It was a year of two halves for house prices in 2017 with a 9% surge in the first six months but almost no change in the second half.

In the Daft.ie report on the year, Ronan Lyons of Trinity College Dublin said the Central Bank’s mortgage rules had been pivotal.

“At the start of the year, the Central Bank relaxed its minimum deposit rules, in particular for wealthier first-time buyers. Whereas previously, any mortgage credit above €220,000 required a 20% deposit, from 2017 all first-time buyers required no more than a 10% deposit, no matter how large their mortgage.”

He said that relaxation of the rules spawned an almost immediate price response in the market.

“But a one-off change in rules can only bring about a one-off shift in prices. And once this change in credit conditions had been absorbed by the market, the rules kicked in. Incomes are rising but very modestly.

“Thus the second half of the year was the flip side of the same argument: the Central Bank rules matter when they aren’t changed as well as when they are.”

According to his report, the net result was prices nationally at the end of 2017 were 9.3% higher than a year earlier. That compared to 8% in 2016 and 8.3% in 2015.

The figures show house prices in Dublin rose by 9.1% last year and by 10.1% in the other major cities. Outside the cities, however, the increase was only 7.3%.

Drilling down into the figures, however, shows even further variations. In Dublin city centre for example, prices are 20% higher than a year ago. And while prices in Waterford City have gone up by 8.6%, in Cork City, the increase has been just 5.1%.

Overall, across Munster there has been a price surge of 6.5%. However, that would have been higher but for a fall in prices in almost every part of the province in the last three months of 2017 apart from Cork and Waterford cities. That trend was reflected across Leinster, Connacht and Ulster as well.

Nonetheless, according to Daft.ie, prices are now 47% on average higher than their lowest ebb at the worst of the recession. That is the equivalent of a €76,500 hike since the third quarter of 2013.

In its report, MyHome.ie said the median asking price for new sales nationally was €242,000 in the final quarter of 2017 — in Dublin it was €330,000 compared with €195,000 in the rest of Ireland.

“For the entire stock of properties listed for sale on the website prices rose by 6.2% nationally and by 6.3% in Dublin during 2017,”

it said.

The company’s managing director, Angela Keegan, said housing market transactions grew by 10% in 2017.

“While the increase in transactions — it should come in around 55,000 for 2017 — is welcome the overall picture is that of an illiquid market hindered by the lack of fresh housing supply,” she said.

“If the Irish market was functioning properly we would be seeing around 90,000 transactions per year. At the end of the year the number of properties listed for sale had fallen to just 18,900. This is a fresh record low, down 9.4% on the year.”