House price trends reverse in first three months as regions rise and Dublin falls
PRICE trends in the Irish property market have completely reversed in the first quarter of this year with values now static or falling in Dublin while they continue to rise elsewhere. Prices in Dublin locations have fallen by up to 6.5pc since the start of 2015. The average three-bedroom semi rose in value by 1.32pc nationwide.
While Dublin led the way in the market recovery last year, prices slid on average across the combined city and county areas by -0.28pc in the opening quarter.
And viewed on a six-monthly basis, prices outside Dublin (up 5.1pc) have risen at treble the pace of those in the capital (up 1.55pc).
This reverse is being blamed on fallout from the end-of-year expiry of capital gains tax relief, which caused a rush on property at year's end in Dublin; and also on the impact of new lending restrictions from the Central Bank, which again largely impacted on the capital.
The figures are from the latest Real Estate Alliance (REA) Average House Index. Commissioned by the Irish Independent, it looks at real sale values for Ireland's typical stock home - the three-bed semi-detached.
The biggest falls in Dublin occurred in and around Skerries in the North County, where prices fell 6.5pc from €310,000 to €290,000 since January; in Rathcoole (down 3pc to €320,000) and Lucan (down 1.8pc to €275,000) so far the only location to see prices fall in the last two consecutive quarters.
Not all parts of Dublin saw decreases however. Tallaght in Dublin 24 saw prices increase by 4.55pc in Q1 led by investors cashing in on more affordable family homes in an area of high rental demand. Dublin City Centre saw prices rise 2.2pc also based on investors and Balbriggan rose by 2.5pc. Semi-d prices in all other Dublin locations remained static in Q1.
In Skerries, North Dublin, where prices have dropped by €20,000 in three months, local REA agent Dermot Grimes says the Central Bank's new deposit rules have definitely had an impact in the market, but buyers are also happy to take their time. "Prices have come back to mid-2014 levels," he said.
However, the rest of the country is still playing catch-up given that the average Dublin semi still sells for €352,500 - almost twice the nationwide average of €187,153. REA CEO Philip Farrell says: "In areas of the capital where average values are below the €220,000 threshold, strong demand still exists from both first-time buyers and investors."
But elsewhere there were some startling jumps in values in just three months - most notably in Trim, County Meath which is suffering from a property shortage and where values shot up 12.9pc from €155,000 to €175,000. Wexford Town saw an 8pc hike in Q1 from €125,000 to €135,000. Bundoran in County Donegal saw prices rise by 7.5pc - €65,000 to €70,000 and Carlow also saw increases of 7.5pc. Kilkenny City, also experiencing shortage of family-sized accommodation, saw semi-d prices rise 7.4pc from €135,000 to €145,000.
Mr Farrell estimates that the vital value threshold for profitable building stands at €220,000 and points out that in most counties, prices have not reached the level to allow it to be viable.
"Our survey is taken around the country and in almost every case, supply is the defining factor. Rental demand is only going one way due to many people being caught in a holding pattern and an increase in rents of between 10pc and 15pc in 2014 which could quite possibly be matched this year."
When looked at over a 12-month period to March, the highest hikes occurred in areas like Cork City (30.1pc) where semi values rose to €275,000, and Longford which saw the biggest percentage annual rise (37.5pc) taking Ireland's cheapest average semi-d price to just €55,000. Westmeath rose 33.15pc to €122,500.
Mr Farrell asserts that supply remains the single biggest issue that the Government needs to address. "Until the costs of building are lowered, or the market takes an unlikely jump, we are looking at being unable to satisfy the demand that exists."