Saturday 20 April 2019

Big freeze in house prices blamed on Central Bank rules 'stifling the market'

Stock photo
Stock photo
Mark Keenan

Mark Keenan

The prices of average second-hand homes have largely frozen for the first quarter of 2019 throughout Ireland with most counties showing prices unchanged since the beginning of the year.

The big freeze in house prices in 2019 is being attributed to property prices in many areas hitting the Central Bank-enforced mortgage lending ceilings.

Other factors include a lack of cash buyers in some locations, and a proliferation of new homes in other areas affecting the values of existing properties.

Meanwhile, increased red tape means there has been a slow-down in applying for mortgages and selling homes.

While static prices were the norm - including in Cork, Galway and Limerick cities - prices dipped in some areas.

In Dublin city, the price of a three-bed semi is down 1.75pc (€7,667) since December, while the same home in the south of the county is down 1.8pc (€7,500).

The biggest fall in prices was seen in Louth, where they dropped 3.6pc (€7,500) thanks largely to extensive new home developments.

However, most parts of the country saw prices stagnate in the first quarter of the year, including in Carlow, Cavan, Clare, Waterford, Wexford, Kilkenny, Laois, Offaly and north Co Dublin.

The findings are contained in the Irish Independent/Real Estate Alliance (REA) Average House Price Index published today and designed to measure the price of the average Irish property type, the three-bed semi.

Prices rose in some areas, including in commuter-rich Cork county (up 1.4pc) and Leitrim (up 2.2pc).

However, bucking the national trend was Longford, where prices rose by 9.5pc in the first three months of the year. Local agents say this is due to investment in the huge Center Parcs scheme and general affordability.

Brexit uncertainty has been cited as a dampener in some locations, particularly in Border and tourist areas where holiday homes are popular.

And while Q1 activity was high in the same period a year ago, the first quarter has traditionally been the slowest-moving of the year, with vendors traditionally not ready to sell in January or February.

REA spokesperson Barry McDonald said: "Time taken to reach sale-agreed in Dublin is now eight weeks - double that of a year ago - and reflects the difficulties that people are experiencing in obtaining a mortgage.

"We are seeing an appreciable drop in people attaining mortgage approval - particularly for properties above €350,000 - which is creating a ceiling that is stifling the market.

"There are people who have to buy and people who can choose to move. The former are purchasing properties under €350,000, but the latter are either cautious about values and interest rates post-Brexit and are adopting a wait-and-see approach, or else they cannot secure mortgage approval.

"There is no doubt Brexit is causing uncertainty in the higher end of the market.

"Our agents also report that buyers have been less location specific and more driven by price in Dublin and surrounding areas in the first quarter."

The average semi-detached house nationally now costs €235,898, the Q1 Irish Independent/ REA Average House Price Survey has found - a fall of 0.16pc on the Q4 2018 figure of €236,287.

In Dublin city, the average semi stands at almost twice that, at €437,500.

However, despite a general stagnation, the average house price across the country rose by 2.9pc over the past year - based on higher increases in mid-2018.

It marks a cooling of the 4.6pc average increase recorded in the year to December and indicates that the market is continuing to steady after a 9.1pc overall annual rise to the end of Q1 in 2018.

Prices in commuter counties experienced an annual rise of 2.7pc - with the average house now selling for €248,750.

Among those surveyed, REA McGee in Tallaght is reporting a huge fall in the amount of mortgage approvals in Dublin 24 - an area which is considered a good indicator of the capital's market.

"I have seen a 50pc reduction in the amount of finance-approved buyers at viewings in the past year, with the effect amplified at the end of 2018 and in the opening three months of 2019," it said.

"The demand is there - and it is not being diluted by new homes - but there are fewer people securing finance, despite a lot of activity from the lending institutions."

Drogheda saw the greatest fall in the survey (6.5pc) from €230,000 to €215,000.

Irish Independent

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