Prices paid for property continue to rise, but at a slower pace
Published 26/11/2015 | 02:30
Residential property prices continued to rise last month.
They have now risen for almost two-and-a-half years on an annual basis, but are now going up more slowly than last year.
Prices were up 1.6pc in October. Economists put the slower pace of rises down to the lending restrictions imposed by the Central Bank in February.
The latest rise means that property values have increased by 7.6pc compared with a year ago.
Dublin prices were up 1pc, according to the Central Statistics Office. The lending rules are impacting more strongly in the capital, despite a chronic shortage of properties to buy, experts said.
Outside of Dublin, residential property prices rose by 2.1pc in October, and prices outside the capital were up 10.7pc compared with October 2014.
Economist with Merrion Capital, Alan McQuaid, said price inflation had slowed over the past six months, with the exception of August.
"One has to assume that the tighter mortgage lending restrictions imposed by the Central Bank and the end of the capital gains tax property purchase incentive scheme, as announced in Budget 2015, have weighed negatively on the market this year," he said.
He said the pick-up in planning permissions, from historically low levels, should help to dampen property prices going forward.
Director of Research at Savills, John McCartney, said the steam had come out of the market. "The frenzied activity we saw 12 months ago as buyers rushed to avail of tax breaks and more lenient lending practices has gone," he states.
"But agents are reporting steady transactions and robust prices, particularly in the €400,000 to €650,000 price range, where competition is hottest."
Savills expects annual price growth by year-end in Dublin to be at around 5pc.
KBC Bank economist, Austin Hughes, said the Central Bank's mortgage limits were pushing up rents and keeping housing transactions muted.
Goodbody Stockbrokers economist, Juliet Tennent, said the Central Bank rules on mortgage lending were dampening the market, with the biggest effect in Dublin.
She said the number of transactions being recorded on the Property Price Register was increasing this year, but at a slower pace than last year.
The average price nationally is now €221,400, up €15,000 in the past year, according to calculations by Goodbody based on the CSO figures.
In Dublin the average price is now €294,000, up €13,000 in a year. Outside the capital, the average price is €181,000.