House prices are expected to rise by around 5% in 2019 after slowing sharply in Q3 and stabilising in the last quarter of 2018 according to the latest house price report from MyHome.ie.
The report, which is published in association with Davy, predicts that robust demand and rising incomes will continue to push house prices higher once the uncertainty of Brexit has been resolved.
While asking prices nationally fell back by 0.9% and were unchanged in Dublin in Q4 – as per normal seasonal trends - the annual rate of inflation nationally was 6.1% while it was 3% in Dublin.
This means the median asking price for new sales nationally is €266K down €2K from the last quarter while the price in Dublin remains unchanged at €375K. Newly listed properties are seen as the most reliable indicator of future price movements.
The author of the report, Conall MacCoille, Chief Economist at Davy, said the overall picture is that the recent slowdown has evened out, housing supply is slowly picking up - even if it remains well short of demand - and liquidity is slowly improving off a low base.
“Predictions that the Dublin market would contract have proved wide of the mark, perhaps because too much attention has been paid to more expensive property types and areas. Suggestions that the tightening of the Central Bank lending rules would cause the market to stagnate have also proved to be well wide of the mark.”
“We estimate that the value of transactions in 2018 is up by almost 20% and will finish the year just below €18bn versus €14.9bn last year. This represents close to 5% growth in the number of sales. While the tightening of the CBI lending rules has been successful in taking some of the heat out of residential sales, one serious side effect is that this heat has been transferred to the rental market with rental inflation set to remain buoyant.”
“Looking ahead to 2019, Irish banks will soon have fresh allocations of high loan-to-income (LTI) mortgage loans (exceeding the 3.5x multiple) to approve next year. While 2018 was associated with an adjustment to the tighter CBI lending rules and slowing house price inflation, we expect 2019 will see robust demand and rising household incomes continue to push prices higher – albeit at more moderate levels - once the uncertainty of Brexit has been resolved.”
The Managing Director of MyHome.ie Angela Keegan said she believes 2018 will be remembered as the year when the stock of both new builds and second-hand homes turned the corner.
“There are over 21,700 homes listed for sale on MyHome.ie at the moment. While this is still far too low to meet demand, it is an increase of 15% on last year. In Dublin there are 5,000 homes listed for sale, up 44% on the 3,500 this time last year.
“The underlying picture is that homebuilding is picking up. In total over the past 12 months planning permissions have been granted for 29,500 units – 70% higher than the current level of homebuilding. However, this is still short of the 35,000 we estimate is needed to meet demographic pressure.”
“Meanwhile the average time to sale agreed remains relatively stable at four months nationally and three months in Dublin.”