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Wednesday 17 September 2014

Rise in home prices sparks hopes of recovery

Prices grow in four of past five months

Donal O’Donovan and Maeve Dineen

Published 29/12/2012 | 05:00

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THE biggest property-price rise in six years has sparked fresh hopes of a recovery in the housing market in 2013.

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House prices increased nationally by 1.1pc in November – and have now risen in four out of the past five months.

And prices rose fastest across Dublin, where the residential market was up by 2.4pc, accord- ing to figures from the Central Statistics Office.

Prices outside of Dublin rose by 0.3pc.

The November increase was the fastest rise since September

2006, according to the figures. In fact, November's rise in the capital is higher than the typical monthly increase during the boom years, when prices rose at between 1.2pc and 2pc per month.

Prices had fallen in October, but the renewed increase in November has sparked hopes that the five-year property crash may be coming to an end.

Economists said it was too early to conclude that prices would now keep rising, but most agreed values may have at least stopped falling.

Some experts said the price rise in November was due to the fact that it was the last month for homebuyers to close purchases ahead of this year's Budget.

For most buyers, it was also the last opportunity to benefit from the mortgage interest relief, a tax break for home- buyers that is due to be scrapped at the end of this year.Simon Ensor, director of estate agents Sherry FitzGerald, said the latest data from the CSO was consistent with what most estate agents had been experiencing in the last quarter.

"There has been a significant uptake in activity in the last six months but especially in the last quarter," Mr Ensor said.

"At the start, more properties were selling at the bottom of the market but we have seen prices move up. No doubt first-time buyers were particularly active in the last quarter. But the abolition of the mortgage interest relief was not the sole reason for this. We saw increased activity in all prices."

Mr Ensor said three and four-bedroomed homes were in most demand.

"Any three or four-bedroomed house in striking distance from the main city centres of Dublin, Cork, Galway or Limerick will attract huge demand. Often you could have three or four people bidding on such a house," he added.

He said demand for apartments remained subdued, with people bypassing apartments and going straight for starter homes.

The country has endured five years of one of the worst property crashes in the world.

Property experts said that we needed at least six months in a row of rising prices nationally to be sure property values were back on the up.

The average value of a property nationally is now €158,000, down from a peak of €313,998, calculations indicate.

"This data strengthens our view that the Irish housing market entered a new phase during 2012, following four consecutive years of double-digit price declines," Philip O'Sullivan, chief economist at NCB Stockbrokers said.

Danske Bank's Owen Callan sounded a note of caution.

"As always with Irish property data, given the still-low turnover and the fact that cash purchases are excluded from the data, we would be cautious to suggest property prices are rebounding strongly or that a recovery is fully in place," he said.

Data recorded by the property price register shows that total residential property transactions nationally were up at least 31pc in the first 11 months of 2012.

Divide

However, a clear urban/rural divide is emerging with Dublin transactions up 44pc year-on-year and house transactions in the rest of Ireland up 26pc.

"We see divergences across the country, with the prospects for the Dublin market continuing to look brighter than for other areas," Mr O'Sullivan added.

Despite the uptick in house prices, they are still down almost 16pc in the last year, and have more than halved since the peak of the property boom in 2007.

Dublin house prices are still 55pc below the peak levels.

The fall in the prices of residential properties in the rest of Ireland is slightly lower at 47pc.

Apartment prices continue to take a hammering with the price of Dublin apartments falling a further 1.9pc in November.

Apartment prices in the capital are down 13pc year on year.

The CSO index is based purely on mortgages for house purchases and does not take into account cash transactions, while estate agents have also suggested the figures lag behind the real picture on the ground.

The introduction of the new property price register in September has brought new transparency into the industry and means people can see exactly what prices houses and apartments are selling for, rather than relying on estate agents.

However, the introduction of the property tax next year and the high level of unemployment would stop any sustained property market rise, economists said.

Irish Independent

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