Saturday 19 August 2017

House prices increase by €19k in a year - wiping out gains from help-to-buy scheme

Between January and June, some 3,129 new properties were sold, an increase of 468, or 17.6pc, compared with the same period of 2016. Experts suggest at least 25,000 new units are needed annually to curb rising prices and rents. Stock picture
Between January and June, some 3,129 new properties were sold, an increase of 468, or 17.6pc, compared with the same period of 2016. Experts suggest at least 25,000 new units are needed annually to curb rising prices and rents. Stock picture
Paul Melia

Paul Melia

Housebuyers are paying an extra €19,000 for their homes compared with a year ago - effectively wiping out any gain from the Government's first-time buyers' grant.

The average price paid for a house or apartment now stands at €256,193, according to the Property Price Register (PPR), which is up 8pc - or €18,954 - in 12 months.

While there are growing signs that supply is slowly increasing, it is still well below the levels needed to meet demand.

Between January and June, some 3,129 new properties were sold, an increase of 468, or 17.6pc, compared with the same period of 2016. Experts suggest at least 25,000 new units are needed annually to curb rising prices and rents.

The PPR highlights what is happening on the ground in the country's dysfunctional property market where rents are now at boom-time levels.

It shows that the lack of homes is stifling demand, with the overall number of properties trading hands falling in the first half of the year compared with the same period of 2016 - down 10.3pc to 19,144.

Comparing the first half of this year with the same period of 2016, the register shows that across all counties, prices are rising. This highest increase is in Sligo, where a home now costs €133,219, up 37pc. The lowest increase is in Wicklow, at 3.1pc, but homes in the Garden of Ireland are among the most expensive in the State, averaging €323,570.

Read More: Rise in the sales of new homes being driven by key locations

The most expensive place in which to buy remains Dublin, the commuter belt, Cork and Galway, where demand is highest, but noticeable increases are recorded in Laois, Westmeath, Offaly, Monaghan, Roscommon and Longford, where prices rose by more than 15pc.

The data also shows:

In the first half of last year, a total of 21,339 transactions were recorded;

So far this year, some 19,144 have been finalised, a fall of just over 10pc. In the same period, prices have risen by 8pc nationally;

Only in three counties did the number of homes selling increase - Meath, Cavan and Wicklow;

The sharpest reductions were in Sligo (down 33pc), Longford (31pc) and Donegal (26pc);

Overall, just over €4.9bn was spent on residential property in the first half of the year, a drop of almost €158m, or 3.1pc;

The most expensive home sold so far this year was 'Fintragh' on Dublin's Shrewsbury Road, which sold for €8.45m on April 13.

The PPR data confirms that sales of expensive homes are rising. The number of €1m-plus properties trading hands rose by 12pc to 294.

The number costing between €500,000 and €800,000 remained relatively static, at around 1,300, but sales of homes costing between €300,000 and €500,000 increased sharply.

In the first half of last year, some 3,060 fell into this category. This year, it has increased by 373, or 12.2pc.

This is in part due to increased competition from buyers due to increased availability of mortgages, coupled with the help-to-buy scheme - which allows first-time buyers to claim back up to €20,000 in taxes to help secure a home loan.

Experts warned at the time of its introduction in July last that it would add to selling prices. The initiative is strongly supported by the Construction Industry Federation, but the measure could be axed as part of a review of the Government's housing strategy, 'Rebuilding Ireland'.

Taoiseach Leo Varadkar told the Irish Independent: "We did see property prices moderate and now they are starting to rise again. Some of that may be down to the changes in the Central Bank rules, some of it may well be down to the first-time buyer measures.

"The Government will have a look at the first-time buyers' grant."

Meanwhile, former Housing Minister Simon Coveney defended the grant. "I think it was the right thing to do...it has changed the way in which developers and builders view building for first-time buyers."

Irish Independent

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