Shortage of family homes drives up prices in capital
PROPERTY prices in Dublin have posted an annual increase for the first time since 2007, in a huge boost to the beleaguered market.
Demand for family homes in some parts of the city is driving the revival, according to three separate reports from property websites Daft.ie, MyHome.ie and estate agent Douglas Newman Good (DNG).
Prices outside the capital are still declining overall, although at a slower pace than recently.
According to Daft.ie, asking prices in Dublin rose by 0.5pc over the past 12 months.
That is the first time since early 2007 that prices in the capital have posted an annual increase. Nationwide, prices are down 6.6pc in the past year -- a much smaller decline than the 15pc drop reported 12 months ago.
MyHome.ie records a fall of asking prices annually of 4.8pc in the capital, almost half the rate of decline nationally, though says prices in Dublin have been stable for six months.
The economist Ronan Lyons, who compiled the Daft report, said the figures showed a "two-tier" housing market forming, with prices outside Dublin beginning to trail the capital.
The small annual increase in asking prices in Dublin is not seen in other cities, where prices are down by between 9.8pc in Cork and 14.6pc in Waterford.
"In Galway, asking prices are down by 10.7pc, while in Limerick they are down by 12.9pc," Mr Lyons said.
"Outside the cities, prices were down by roughly 10pc on average, although the fall was greater in Connacht-Ulster (15pc) than in Leinster (8.5pc) or Munster (9.5pc).
"What we're seeing now is that people want homes that are near jobs, good transport links and so on.
"They are less willing to do lengthy commutes, partly because where they are living is no longer increasing in value on a daily basis.
"There are few signs that supply will increase in Dublin any time soon, so like any market when demand is outpacing supply, prices will increase."
Despite the increases in Dublin, the wider market continued to fall, albeit at a slower rate.
While asking prices don't include how much a property was ultimately sold for, such figures tend to closely reflect the final sale price.
Asking prices are also available much sooner than sale prices, which tend to be made available about six weeks after a property is sold
Mr Lyons said he believes there is a case for demolishing houses in regions where demand is low.
"It's about having supply in the right areas. There is little demand for housing in places like rural Connacht and the market is much weaker there as a result," he claimed.
The Daft report came on the same day as a report from MyHome.ie, which shows that house prices were flat in Dublin for the second quarter in a row.
It said this is the first time Dublin prices have gone six months without falling since 2006.
Overall, MyHome sees prices falling 1.8pc in the first three months of this year, compared to a 3pc dip between October and December 2012.
The report's author, Annette Hughes from DKM Economic Consultants, said there were now clear signs that the market was stabilising – in Dublin, at least.
"At 4.8pc, the annual rate of decline in Dublin is about half the national rate
"Asking prices in Dublin have been reasonably stable over the last year and this may indicate that they are now levelling off.
"Nationally, prices continued to fall, but the annual rate was under 10pc for the first time since 2008 and this is also a positive development," she said.
While both Daft and MyHome looked at the property market overall, the estate agent Douglas Newman Good looked specifically at the market for second-hand family homes – the type of dwelling that is now in the most demand.
According to DNG, such houses have increased in value by 3.3pc in Dublin so far this year and are up nearly 10pc on a year ago.
Perceived "good" areas on the southside of the city are especially in demand.
The average price of a second-hand home in Dublin is now €262,000, says DNG.
Company chief executive Keith Lowe was another to point to the development of a two-tier market between Dublin and the rest of the country.
"Dublin and some other high population urban areas, such as Galway, Cork and Sligo, are outperforming the rest of the country," he said.
"Due to its high population, infrastructure and employment Dublin is likely to continue to outperform the rest of Ireland in terms of house-price recovery," he added.