House prices are continuing to rise but the rate of increase is moderating due to tighter bank lending and stretched affordability in Dublin, according to the latest house price report from MyHome.ie.
The report, which is published in association with Davy, found that the prices of newly listed properties nationally rose by 4.8% in Q1 while prices in Dublin rose by 3.3%. Newly listed properties are seen as the most reliable indicator of future price movements.
The median asking price for new sales nationally is €260K while in Dublin it’s €345K. The figure for outside Dublin is €210K.
Nationally, asking prices are up 9.5% on the year, while in Dublin price inflation is 8.2%.
For the entire stock of properties listed for sale on the website prices rose by 1.9% nationally and by 1.8% in Q1.
The author of the report, Conall MacCoille, Chief Economist at Davy, said that while house price inflation would remain close to 10% outside Dublin for 2018, stretched affordability in the capital and a pick up in housing supply suggested the rate of inflation would continue to moderate.
The tightening of the Central Bank mortgage lending rules coupled with stretched affordability was always likely to be first felt in Dublin. The house price -to-income ratio for first-time buyers in Dublin was 4:1 at the end of 2017 and this compares with 3.5:1 recorded in Cork, Galway, Limerick and Waterford.
Inflation in Dublin is now 8.2%, down from just over 11% in Q4 2017. The cooling off is already evident in more expensive areas and property types. The median asking price in Dublin South City was flat year on year at €275K but was up 12.8% in Dublin North City to €225K. The median one-bedroom apartment price in Dublin increased by 13% over the past 12 months to €190K; in contrast four-bedroom detached house prices have been flat at €650K.
The other key trend we are seeing is that house supply is finally picking up. Although the number of properties listed nationally on MyHome.ie is largely unchanged at 18,800 the number of properties in Dublin is 3,900, up 20% on last year.
Furthermore, the number of new developments on MyHome has increased to 423, up 24% on the 342 recorded in mid-2017. While two thirds of these developments are in the greater Dublin area there has also been a sharp increase in some other areas – in Cork for example the number is 64, up 68% on mid-2017. Although moving in the right direction the current level of homebuilding – circa 12,000 per annum – remains well short of the natural demographic demand of at least 35,000 each year MacCoille concluded.
The Managing Director of MyHome.ie Angela Keegan said that while first time buyers would continue to be concerned at the rate of inflation, there were some positive trends in the new figures.
Transactions levels are up 10% in the first two months of the year and at this stage we would be predicting an 11% increase on last year’s figure of 54,000. Given that the level of transactions was 18,400 in 2011 it is encouraging to see that we should be in or around the 60,000 mark this year
Meanwhile activity at the very top end of the market shows little sign of slowing down. Our analysis of the Property Price Register shows that the number of house sales above €1m rose to 826 in 2017, up 25% on the previous year. There are currently 506 properties with an asking price exceeding €1m listed for sale on MyHome.ie Keegan said.
