Property prices rise significantly outside Dublin but fall in capital
Published 06/10/2015 | 02:30
House prices rose significantly outside Dublin, but fell in the capital during the past three months, a new report reveals today.
Prices slipped back by 1.4pc in the Dublin area between June and September. This was only the second fall in three years, according to the latest Daft.ie house price report.
However, outside the capital it was a different story, as prices were up 3.9pc.
This is in stark contrast to previous years, where the capital surged ahead while the rest of the country lagged behind.
The Central Bank borrowing limits introduced earlier this year have been cited as the reason for the fall in prices in the capital.
Buyers are now being pushed out of the Dublin area, which is inflating prices in the rest of the country. Rising rents are also making it more difficult for families to put money aside to afford a deposit.
However, the national average asking price in the third quarter was just over €205,000.
This is compared with just under €190,000 a year ago, and €164,000 at its lowest point in early 2013. It was the third quarter in a row that prices rose strongly outside Dublin.
In Cork, prices rose by 6.8pc, while both Galway and Waterford cities saw significant rises, as there was a 7.2pc increase in just three months.
The largest increase was in Limerick city. It saw prices rise by 7.7pc between June and September.
Outside the major cities, prices were up 3.5pc.
Over the past year, prices in the capital were up just 2.4pc. This compared with a massive jump of 24.5pc in the third quarter last year.
"The latest figures confirm that the Central Bank borrowing rules have had a dramatic impact on house price inflation in the dearest parts of the country," said the author of the Daft.ie report, economist Dr Ronan Lyons.
Dr Lyons said that in year-on-year terms, house prices are now falling in Dublin 6, Dublin 14 and Dublin 18, while other expensive markets, such as Dublin 4, Dublin 6W and South County Dublin, are effectively static.
"This immediate cooling of the market is to be welcomed, but a side-effect of the income caps is a shift in demand elsewhere in the country," he added.
The Central Bank lending caps limit the amount that can be borrowed for a mortgage based on income, and require set levels of deposit to qualify for a mortgage.
In Dublin's commuter counties house prices rose by 14pc over the last 12 months. This is due to buyers moving further afield to find a home.
"In Ireland's other cities, where year-on-year inflation is at 18pc, this is arguably Central Bank income caps acting as a target, rather than a constraint," said Dr Lyons.
Asking prices are up 2.4pc in Dublin compared with last year, to €306,540, Daft.ie has calculated.
In Cork city, prices are up 19pc on an annual basis to €225,361. Galway city has seen annual asking prices rise by 18pc to an average of €222,616.
Limerick city prices are up 17pc to €143,929, while in Waterford city the average asking price is €126,688, up 12pc.
The Institute of Professional Auctioneers & Valuers said the Central Bank borrowing rules were not working.
"In our view the rules were premature and are far too severe," Pat Davitt, the organisation's chief executive said.
"The rules are forcing young people in the capital who cannot come up with a deposit to remain in rental accommodation or move to the burgeoning suburbs and beyond, where they will incur increased transport costs.
"This is no way to develop as a society and it is indicative of a dysfunctional property market," he added.
He said the lack of suitable properties for purchase is a critical issue that needs to be addressed.
"Even with the increase in prices outside of the capital, properties are selling in several locations for less than it would cost to build them," Mr Davitt said.