Home prices rise - and lack of supply is contributing factor
Published 04/04/2016 | 02:30
House prices rose across the country in the first three months of the year - but a lack of housing stock is one of the main reasons for forcing up the cost of buying.
Property prices are set to rise throughout 2016, including for homes in Dublin, where prices have remained stagnant for the past 12 months.
However, the capital will continue to lag behind the rest of the country, a report by Myhome.ie and Davy stockbrockers shows.
Counties outside of Dublin will still see the greatest price rises, it predicts.
The report shows that the price of properties newly placed on the market rose by 2pc between January and March.
Properties in Dublin saw increases just shy of 1pc, while prices for three-bed semi-detached homes rose by 3.6pc.
There were major increases in counties just beyond the Dublin commuter belt.
Semi-detached homes in Monaghan posted an 11.6pc rise to €120,000 on average, and prices in Cavan rose 10.8pc to €107,500.
Average prices rose in almost every part of the country during the first quarter of the year.
Only one county, Wicklow, saw prices decrease in the same period.
However the report's authors note a number of problems including a shortage in supply, tight mortgage lending rules and the lack of a government.
The report states that homes inside the Dublin commuter belt account for 75pc of property transactions in the country that exceed €220,000.
Just 35pc of the residential properties sold in Ireland last year exceeded this value.
Homes under this threshold require a deposit of just 10pc and are exempt from the most stringent of the Central Bank mortgage rules.
The bank brought in loan limits last year that have been repeatedly blamed for allegedly locking buyers out of the housing market.
Davy's chief economist, Conall MacCoille, said that a key factor supporting property prices this year would be a tighter housing market.
"Overall, homebuilding levels look set to remain depressed for some time and while this will support Irish house prices, it will hurt activity levels."
Mr MacCoille added that the slow progress being made by Fine Gael in forming a new government would delay building under the previous government's Construction 2020 strategy.
"The Central Bank mortgage lending rules have prevented households from reacting to the lack of housing supply by taking on ever more highly leveraged loans and bidding up house prices further," he said.
"Our analysis shows this has been mainly a Dublin/commuter-belt phenomenon, where the lack of housing supply is most severe and affordability most stretched.
"The ambitious goals set under the last government's Construction 2020 strategy are unlikely to be attained with no stable coalition yet formed for the new Dáil."
Angela Keegan, managing director of Myhome.ie, said the poor level of home sale transactions remained a major issue.
However, she said the price increases were a welcome boost: "The challenge for the market will be to maintain this momentum where stock is reduced and new homebuilding is at a very low level. In fact, 22 counties recorded price growth, while prices remained stable in three others."