Rate of property price rise hits its strongest level in close to a year
Published 01/10/2015 | 02:30
Property prices jumped in August, recording their strongest monthly increase since last October.
August is traditionally a quite month in the housing market.
Economists were puzzled by the higher-than-expected rise, but put it down to the strong growth in the economy and a continuing shortage of properties to buy. Others said it could be a statistical anomaly.
Restrictions on mortgage lending that were introduced in February had taken much of the steam out of the housing market that had been evident up to the end of last year.
But the new figures show prices rising by 2.3pc in August.
This took the annual rise to 9.5pc, the latest property price index from the Central Statistics Office shows.
In Dublin, prices were up 2.8pc in the month and are now 8.2pc higher than last year.
House prices, which exclude apartment prices, rose even more in the capital, with an increase of 3pc. Outside Dublin, there was a 1.9pc increase in August. Prices in rural areas are now showing stronger increases than in the capital, with a 10.8pc rise in the past year, the CSO figures show.
Nationally, prices are still 35pc lower than they were at the peak of the market in 2007.
Calculations by Goodbody Stockbrokers, based on the CSO figures, show the national average sales price is now €215,000. This is up €19,000 in a year.
In Dublin, the average price is €288,000, up €22,000 in a year. Outside Dublin, prices have risen by €17,000 in a year to €174,000.
Economist with Merrion Stockbrokers Alan McQuaid said: "This was a much stronger performance than we had expected and it reversed the downward trend of the past four months."
He said the monthly increase in August was the largest since October.
"It is hard to know whether the rise in August was just a seasonal thing or a sign of renewed strength in the housing market on the back of a booming economy."
KBC Bank economist Austin Hughes said the overall trend was still for slower-paced rises in property prices.
"We still think a trend easing in the pace of property price inflation is under way but the combination of strengthening domestic economic conditions and a lack of supply in key segments means this is likely to be an extended and uneven process."
Goodbody economist Juliet Tennent said strong demand for homes and a consistent lack of supply were pushing up prices.
Meanwhile, separate figures from the Central Bank show that loans to households declined again in August.
Lending for house purchase continued to decline at an annual rate of 2.6pc in August.
This rate has been fairly stable since December.