Charlie Weston: 'Property prices to keep rising this year - but increases now set to be more modest'
Property prices are continuing to rise, but the pace of the increases has slowed markedly. The annual increase of 7pc in November means price inflation is now at its lowest level in two-and-a-half years.
And there was a fall in prices in the month of November when compared with the previous month, according to recent Central Statistics Office figures.
It is not the first time monthly property prices have fallen, and one month's fall does not a trend make. But the drop in values in November does reflect how messed up the market has become.
A year ago prices were going up at a rate of 11pc, according to the Central Statistics Office.
Dublin prices rose by 5pc in the year to November. Central Bank mortgage lending rules are squeezing buyers out of the market in the capital, according to economists. Buyers are limited to borrowing three-and-a-half times their income.
Outside the capital, much sharper rises were recorded. Prices were up by 9.3pc annually in November in the rest of the country. The region outside of Dublin that saw the largest rise in property prices was the midwest at 21pc, while the smallest rise was recorded in the border region at 6.1pc.
There was also a fall in the typical price paid for a property across the country.
The median, or middle price, was €250,000 in the month of November. This is down €6,000 from the previous month.
It is the first time in months that they median price has fallen.
Statisticians warned that it was just one month's fall and was not indicative of a trend yet. But up to now, rises have been so strong that few buyers can now afford the prices.
The moves by the Central Bank to restrict all mortgage applicants to borrowing no more than three-and-a-half times their income is pricing first-time buyers, in particular, out of the market.
And this is despite the fact that it is now cheaper to service a mortgage than pay rent in almost all parts of the country, according to research by Daft.ie.
Supply is slowly coming to the market, with 23,000 units expected to be completed this year - even if that not be enough to meet demand.
None of this means that property prices will now fall. Even with extra supply, developers are unlikely to drop prices as they paid inflated amounts during the boom for sites and material and labour costs are rising.
However, prices should rise at a more reasonable rate this year. The impact of the Central Bank lending limits mean prices will rise by between 3pc and 5pc, in line with pay rises, economists think.
Sunday Indo Business