House prices rose by just 1% in 2019

House prices have flatlined across the country, rising by less than 1% in 2019, according to the latest property report.

Prices are expected to remain stable in the coming months as the spectre of Brexit and the Central Bank’s decision not to tweak mortgage lending rules are factored in.

The report, published by MyHome.ie and Davy, found that annual inflation has now slowed to just 0.72% nationwide. In the last quarter of the year, prices declined by 0.45% nationally and by 0.5% in Dublin.

The average price for new sales nationally is now €267,000, while in Dublin it is €374,000.

The findings come just days after property website Daft.ie found reported that prices were down by 1.2% in 2019. It was the first fall in prices since 2012.

Conal MacCoille, chief economist with Davy Research, said the slowdown was “inevitable”. Mr MacCoille said prices are flatlining as buyers and sellers wait “for clarity on Brexit”.

“The Central Bank of Ireland rules have stopped first-time buyers taking out too much mortgage debt this time around,” he added.

The analysis shows the average residential transaction in Ireland — some €292,000 — is now 6.8 times the average income of €43,000, slightly lower than the rate in the UK, where the average transaction is seven times average income.

Quarter on quarter, prices declined by 0.45%. Annually, there has been a slight increase on a national basis — up 1.4% — but prices have flatlined in the capital as inflation dropped to zero.

It means that 2019 was the first year in which house prices increased at a slower pace than earnings since 2012.

The median asking prices:

• Cork €235,000, up 1.73% versus 2018;
• Kerry €155,000, up 3.33%;
• Limerick €210,000, up 7.69%;
• Waterford €175,000, up 4.17%;
• Tipperary €150,000, up 3.45%;
• Kildare €220,000, no change;
• Dublin €320,000, up 1.59%

Regionally, patterns vary widely. In Leinster, the picture was broadly one of slowdown: Prices fell in Laois, Offaly and Louth, and remained flat in Carlow and Longford. Even in Wexford, where prices increased, it was marginally by just 2.6%.

In Munster, prices in Clare bucked the trend, rising by 11.7%. However, there is clear evidence of a slowdown elsewhere.

In Cork City, prices have declined by almost 2%. In Tipperary prices were up 2.4% to €175,000 but were flat in Waterford, also at €175,000. In Waterford City, prices were up 7.8% to €139,000.

The report shows some turbulence in the market. There was an 11% decline in the number of homes listed for sale, for example, to just 19,300. Mortgage lending to first-time buyers is increasing, though, up 15% in the first three quarters of 2019.

In Dublin, high-value transactions — those worth more than €500,000 — are down 8%, but those in the €300,000-400,000 bracket are up 7%.

Housing completions also passed the 20,000 mark last year, while commencements are in the region of 26,000. While Central Bank estimates have identified a need for an escalation in the number of builds, Mr MacCoille said these figures are positive.

The rental sector remains under pressure, with rents up 4.5% in the year to November.

The buy-to-let sector is showing no signs of life, with just 884 buy-to-let mortgages approved in the first three quarters of 2019, a 19% decrease.

Looking forward, MyHome.ie managing director Angela Keegan forecasts “more settled price expectations” due to the “clarity” provided by Brexit.

“For most of the year, we understandably saw prospective purchasers being reluctant to take the plunge due to these two unresolved issues, leading to sluggish house price inflation,” she said.