Property prices to climb higher - putting squeeze on new buyers
Published 18/11/2016 | 02:30
The rate of property price rises has picked up, with experts predicting that prices are set to rise even further.
Investors attracted into the market by soaring rents were blamed for the surge in prices. This is putting the squeeze on potential first-time buyers.
Almost a third of the houses bought in Dublin in the past year were snapped up by investors, responding to rents being at an all-time high.
New figures from the Central Statistics Office show prices across the country rose by 7.3pc in the year to September.
Prices outside Dublin have risen much more than in the capital. In the midlands, prices surged by 15pc. In the west, prices were up 12pc.
Experts expect prices to keep rising due to investor demand, a shortage of supply and the introduction of the Government's controversial help-to-buy scheme.
The increase in September compares with an increase of 6.8pc in the year to August, and an increase of 4.2pc in the 12 months to September last year.
In Dublin, residential property prices increased by 5.4pc in the year to September.
Residential property prices in the rest of the country were 11pc higher in the year to September.
The average property price across the State is now €253,000, while the Dublin average is €383,000. In contrast, in the Border area the average price is €112,000.
Dr John McCartney, director of research at estate agents Savills Ireland, said prices would keep rising. He said 29pc of the 13,000 properties sold in Dublin in the past year were bought by investors.
Central Bank lending rules have slowed down mortgage borrowing, pushing frustrated buyers into renting. This is pushing rents higher.
Dr McCartney said: "With demand vastly outstripping the supply of rental properties, rents are set to keep rising.
"This will lead to intensified competition between investors looking to buy properties and will drive further price growth."
Davy Stockbrokers analyst Conall Mac Coille said housing market transactions were now showing renewed growth, with €9.2bn recorded so far in 2016.
And developments in bank lending also point to higher house prices. The average mortgage taken out to buy a house hit a fresh high of €198,900 in September.
"In September, the average mortgage loan approved rose higher still to €206,800. So, despite the Central Bank's lending rules, buyers are taking out higher levels of mortgage debt."
Overall, the national index is 33pc lower than its highest level in 2007. Dublin residential property prices are 33.5pc lower than their February 2007 peak.
Separate research carried out for mortgage lender EBS shows affording mortgage repayments is a huge financial challenge for a typical first-time buyer.
It takes 33pc of the net income of someone on €55,000 to afford a mortgage. This level of income is one-and-a-half times average annual earnings, economic consultants DKM found.
Housing Minister Simon Coveney told the Dáil he had commissioned an independent audit of house-building costs.
He said land costs, the price of concrete, a fair profit and other issues had to be measured so a "reasonable building price" could be arrived for each part of the country.
"We need to benchmark against the cost of building houses in other parts of Europe," he told Fianna Fáil's Barry Cowen.
"We need to look at the costs of concrete in Ireland compared to other parts of Europe, which is a fair ask."