Property boom sees prices rise by more than 10pc
THOUSANDS of homeowners have been lifted out of negative equity thanks to the latest surge in property prices.
The value of homes and apartments is again rising at a double-digit level – for the first time since the property bubble burst.
Prices shot up by more than 10pc across the country in the year to May and by twice that in Dublin, the Central Statistics Office (CSO) said.
It was the strongest rise for seven years. It is estimated by economist Jim Power that around 25,000 Dublin homeowners have escaped negative equity thanks to massive rises in property prices over the last two years.
However, there are still an estimated 300,000 homeowners in a situation where the value of a property is less than the mortgage taken out on it.
And the sharp rises are making it more difficult for new buyers. The surge in values means that a house valued at €300,000 in Dublin last year is now worth €366,000.
Economist with Davy Stockbrokers Conall Mac Coille said: "This is the strongest rate of house price inflation since May 2007. However, it was entirely driven by the capital."
The CSO said prices nationwide rose by 10.6pc in May, when compared with a year previously. In the month of May, prices nationally were up 2.3pc.
It was the 12th month in a row that prices rose nationally.
Prices jumped by 22pc in Dublin compared with a year ago, after a rise of 4.2pc in the month. Apartment prices jumped by 19.5pc compared with a year ago.
Outside of Dublin, prices were up 1.8pc compared with a year ago and up 0.6pc in the month. Property prices outside the capital have risen every month now this year when compared with the same months a year earlier.
Calculations by Goodbody Stockbrokers, based on the CSO figures, indicate that the average property is now valued at €183,000 nationally. This is a rise of almost €18,000 in a year.
In Dublin, the average price is now €242,600, up almost €44,000 in a year. Outside the capital, prices now average €150,000, up €2,600 since May 2013.
Mr Mac Coille said the sharp price rises reflect a chronic lack of supply of suitable properties and that first-time buyers with mortgages were being squeezed out of the market by investors.
Property Industry Ireland (PII), the IBEC group that represents businesses in the property and construction sector, said the price spiral was due to a shortage of properties to buy and predicted that prices would keep rising on the east coast.
PII director Dr Peter Stafford said the number of properties being built had not changed in four years.
"It is likely that, as in previous years, around 8,500 new properties will be built this year, far below our annual need of 25,000.
"Until measures are put in place to improve the supply of new properties in areas where they are needed, prices will continue to rise."
Prices over the entire country are still down 45pc from their peak in 2007, the Central Statistics Office said.
The price rises were revealed as Ulster Bank has launched a new three-year fixed rate for new and existing mortgage customers.
The 4.5pc rate is for three years and is available for those borrowing up to 90pc of the value of a property.
Meanwhile, US-based Kennedy Wilson, which has spent €1bn here on property over the last three years, has signalled that it is starting to move on from the Irish market, switching its focus to Spain and Italy.
"We think it has been great in Ireland and see things still coming off banks' (balance sheets) but pricing is moving ahead of itself a little bit," executive Fiona D'Silva said yesterday at a property conference taking place in London.