Tuesday 6 December 2016

Property prices: Costs rise as buyers target 'value' areas

Laura Larkin

Published 04/07/2016 | 02:30

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The number of houses on sale has risen for just the second time in five years, amid signs that the market is returning to health, with prices around the country continuing to climb.

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New figures compiled by property website Daft.ie show that the number of houses available to buy increased slightly between March and June.

Economist Conall MacCoille
Economist Conall MacCoille

Having reached a nine-year low in March, at fewer than 24,000 houses for sale, the total number of homes for sale in June was 25,260.

However the figure is still down around 15pc on June 2015.

A similar increase was seen this time last year, so it is not yet clear if this is merely a seasonal improvement.

Read more: Dublin prices in the outer suburbs further evidence of policy failure

Meanwhile, house prices have jumped nationally by 6.3pc, compared to last year. The rise is modest when compared with the 15.5pc increase at the start of 2015.

The slow-down is most apparent in Dublin - where annual house price inflation is around 1pc - but around the country house prices continue to catch up with those in the capital.

In Waterford city, the average cost of a house now stands at €138,771 - 17pc more than last year's average asking price.

Cavan also saw a significant jump of around 16pc, with a new house costing around €137,702.

The commuter counties are seeing lower rises of between 4.1pc (Wicklow) and 10.9pc (Meath).

Buyers in the capital are still paying far beyond their counterparts in other parts of the country, with the average cost of a house currently at around €314,311.

The controversial Central Bank mortgage rules introduced last year are behind the slowdown in inflation in Dublin, according to Daft.ie.

However, the new rules are having a further impact as they are driving up prices in areas which are traditionally seen as more working-class.

The new data shows a jump in prices in previously "unfashionable" areas as buyers look for good value.

Read more: 'Housing is a very emotive issue, but we have to think in the long term'

Prices in areas such Dublin 8, 10 and 17 have recorded a rise in prices, in contrast with more affluent postcodes. South Co Dublin is also the only region where an overall fall in house prices has been recorded.

In Dublin 10, for example, a two-bed terraced house costs around €140,000, which is a jump of 3.3pc, compared to 2015.

This can also be seen in Dublin 24, where a two-bed property has jumped in price by about 4.3pc to €156,000.

The gap between asking prices and the sale-agreed price has also narrowed to about 1.5pc, which has been hailed as another sign of returning health.

However in a separate report, Conall MacCoille, chief economist with Davy, cautioned that supply was still critically low and would need definitive policy action from the Government if it is to catch up with demand.

"The number of homes for sale is down 6.7pc on last year. Not surprisingly, properties are selling increasingly quickly, with the average 'sale-agreed' time falling to just four months, a new low. Outside of Dublin, it has fallen to 4.8 months, the first time it has fallen below five since the financial crisis of 2008.

"While the Government has outlined ambitious housing plans, there is no prospect of the shortage of housing supply being alleviated by new construction in the near term," he warned.

This is leading to homebuyers taking out even higher mortgage debts. In May, the average mortgage approved was for €208,000 - the highest since 2011.

Read more: Property prices on the rise again as market braces for impact of Brexit

Mr MacCoille also said the "wildcard" of Brexit was unlikely to impact on the housing market in the short term.

He added: "Brexit's overall impact on the Irish economy and broader fears regarding the health of the European economy could help to temper medium-term expectations for house price growth."

Irish Independent

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