Property prices boosted by biggest rise since 2007 crash
Published 25/10/2012 | 05:00
THE property market is tipped to end the year strongly after posting the biggest increase in prices in more than five years.
It was the third month in a row of rises after five years of plunging values.
Economists say we will need to see at least six consecutive months of rises to be sure that one of the worst property collapses in the world is at an end.
And they warned that next year's introduction of the property tax, and an end to mortgage interest relief, could dampen the recent rises.
But after three months in a row of price increases, there is hope we are nearing the end of the property gloom.
The revival of the property market is being driven by a rise of 2.4pc in house and apartment prices in Dublin, the biggest since August 2006.
Values across the country as a whole were up 0.9pc in September, following increases in August and July, according to the Central Statistics Office.
The September rise nationally was the biggest since the housing market started its five- year long collapse at the start of 2007.
But that must be set against an overall fall of close to 10pc in prices over the past year.
Prices have halved since the peak of the market in 2007.
Estate agency Lisney said demand was outstripping supply in what it called well-established parts of the capital.
However, if Dublin is taken out of the equation completely, house prices in the rest of the country were down last month.
The average price of a house or apartment is now close to €160,000, calculations based on the CSO data show. In Dublin, the average price for a property is now €188,000. Outside Dublin it is €144,000.
Economist with NCB Stockbrokers Philip O'Sullivan said the figures showed the Dublin market had bottomed out, but oversupply in rural areas meant prices were likely to keep falling outside the capital.
And the boss of NAMA, Brendan McDonagh, also said there were emerging signs that the Dublin residential market was close to bottoming out.
"However, it would not be a surprise if price indices gave mixed signals for the near future at least," he said.
Prices are likely to rise for the next few months as first-time buyers take up the offer of generous tax breaks worth up to €22,500 that are due to go at the end of the year, said Juliet Tenent, economist with Goodbody Stockbrokers.
These payments are worth up to €22,500 over the next five years to a first-time buyer couple, and up to €11,250 for a single first-time buyer.
Alan McQuaid of Merrion Stockbrokers said the housing market was starting to stabilise.
And the fact that cash transactions that make up around 40pc of the market were not being captured in the CSO figures, means that there could be even more buying activities than is being recorded in official figures.
"Anecdotal evidence too would point to signs of pent-up demand for family homes, especially in certain areas of Dublin," he said. "Although the latest figures are encouraging, it is too early to say whether house prices are now on a steady upward rise."
A lack of lending, the introduction of a property tax next year and high unemployment are still holding back the property market from sustained rises.
There is a fear among housing experts that sales could dry up in the new year when the mortgage tax relief is withdrawn.
But a shortage of houses was also a problem, estate agents said.
Lisney's head of research Aoife Brennan said: "The biggest problem we have in these areas is the lack of supply. In the 12 months to the end of August, there were 52pc fewer houses on the market and availability was falling by between 3pc and 6pc each month."