House prices gap widens
Published 24/07/2014 | 12:04
House prices in Dublin are now rising at more than seven times the rate of the rest of the country.
Latest official figures reveal the cost of buying a house in the capital has surged almost 25% over the past year.
Concerns have been raised about the huge gap between prices in Dublin and elsewhere, with observers warning it will continue to widen until more housing is put on the market.
The latest Central Statistics Office report shows house prices rose 3.1% in Dublin last month alone, compared with the 2.8% national average.
Overall, the cost of buying a house continues to rise at its fastest rate since the economic crash - with prices nationally up 12.6%.
But the national figures are being skewed by the surge in the capital. When Dublin is taken out of the equation, house prices have risen just 3.5% over the past year.
Average house prices in Dublin remain almost 43% lower than they were during the peak of the property boom in early 2007.
Analysts have warned that cash buyers dominating house sales and a lack of suitable housing are squeezing out first-time buyers.
It is estimated around half of all houses being sold are to cash buyers.
Building of new developments is relatively scarce and mortgage lending remains low.
Estate agents DNG put the average cost of a home in Dublin now at 349,000 euro - up 71,000 euro since the same time last year.
The property company says houses in the west of the capital are rising at almost twice the rate of properties in the north and south of the city.
Also reflecting more first-time buyers coming into the market, homes valued under 250,000 euro are increasing faster than more expensive houses, it says.
Keith Lowe, chief executive of DNG, claims property prices fell too far and too fast during the crash and it was inevitable they would rebound, particularly in Dublin.
"The sharp price rises experienced at the entry level price bracket and properties located in west Dublin, in particular, is good to see," he said.
"These have been slower to recover than other areas and price categories and are now playing catch-up with the rest of the market."
Mr Lowe added overseas investors remain very attracted to Irish property deals, with many turning from commercial properties to residential.
"Whilst recovery is strong in the greater Dublin area we have also noted strong evidence of recovery in market conditions in the areas around Dublin including counties Kildare, Wicklow and Meath," he said.
"We also noted modest signs of recovery in large population urban areas such as counties Cork, Galway, Sligo and Kilkenny.
"Some more provincial areas of Ireland will take longer to recover but it would appear at this stage that most areas in Ireland have reached or are close to the price floor."
Peter Stafford, of Property Industry Ireland, which represents property and construction businesses, said homeowners may welcome rising house prices but those who rent or are seeking social housing are being hit by the rate of the price increase.
"Only 8,400 new homes will be completed in 2014," he said.
"We need 25,000 new homes every year, just to keep prices and rents under control."
Mr Stafford said students going to colleges and universities in cities are finding it particularly difficult to get affordable accommodation.