ARE we right back to where we started when it comes to house price inflation in the greater Dublin area?
The latest CSO statistics underline a tale of two property markets. Continued rapid price growth is highlighted in Dublin where values were up almost 2pc for the month and 10.6pc for the year.
In contrast prices outside of Dublin rose just 0.1pc in August but were down for the year by 2.6pc.
The capital’s rapid increases are based on an acute historic shortage of family homes combined with the arrival of four years of postponed buyers to market, all waving wads of cash savings and fighting to get in before house price inflation negates their savings.
Their savings over four years and more are currently being killed by price inflation at a not inconsiderable rate of around €3,000 per month for those chasing a standard city family home. – the price of which is now rising at more than 1pc per month
Dublin has not been building family sized homes in numbers for a decade – a period in which the GDA population has increased by 200,000 plus. Worryingly there’s nothing in the pipeline – this year’s home completions will be the lowest ever on record. It takes a year for new homes to move from planning to completion.
Estate agents are already predicting that Dublin prices will end the year up by more than 15pc. Contrary to belief, this is something they’re none too happy about. They prefer slow and steady price recovery.
The agencies have even suggested that the increase is actually far higher in Dublin that the CSO suggests - because the CSO does not take cash buyers into account. Savills recently estimated that cash buyers make up more than 50pc of the Dublin market overall. Cash buyers also tend to work the middle and top end where prices are rising fastest.
Will the Government have to consider the unthinkable and introduce temporary incentives to get family home construction underway and head off a housing crisis? The alternative is to let property inflation hinder the recovery on the East coast because big prices equal big mortgages which in turn equal reduced consumer spending equal fewer jobs and less growth.