Housing market starting to cool as capital prices drop
New stricter lending restrictions starting to impact on family homes
The price of an average three-bed semi in Dublin has fallen by up to 7pc in the first indication that Central Bank lending restrictions are cooling the market.
Results of a survey commissioned by the Irish Independent will today show that family homes in Dublin city have fallen in price by almost €20,000 in the past three months.
The selling price for a standard semi-detached house in the city has fallen by 5.02pc from €381,667 to €362,500 since the end of March.
Worst affected areas saw prices slide by 7pc, or more than 2pc a month, and at a faster rate than they have been rising in recent years.
According to the Irish Independent/Real Estate Alliance Average House Price Survey, the value of a semi-detached house nationally now stands at €186,968 - a slight fall on the first quarter of the year when the figure was €187,153.
The new lending regime has also levied a drag factor on the time it takes to sell a home, with Dublin sales times taking one third longer today compared with the start of the year.
The price slide in Dublin is being attributed exclusively to the new rules on mortgage lending introduced at the beginning of this year which requires larger deposits.
Real Estate Alliance (REA) CEO Philip Farrell said: "What we are seeing on the ground is a slowdown in interest in the traditional professional properties, as couples find that raising an €80,000 deposit for a €400,000 home is simply beyond their means."
Some areas in the higher end of the south Dublin city market have seen selling prices fall by up to €35,000 (7pc), where the average three-bed semi would sell in the €400,000 range.
The market for average family homes remains relatively stable in areas such as Tallaght and Lucan, where prices of around €230,000 to €275,000 have remained relatively unchanged.
While prices have dropped by 2pc since the start of the year in more affordable north County Dublin, they rallied somewhat during Q2 due to new housing construction in Skerries.
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Prices in south County Dublin have fallen by 4pc since the start of the year and by 3pc in the past three months.
"Our survey measures house sales right up the end of June and what we are seeing is the first genuine effects of the mortgage deposit rules on the market," said Mr Farrell.
"The rules were brought in to take the heat out of the market, and they have done that, but combined with rising rents and the ending of the Capital Gains Tax exemption, they have had a suppressing effect.
"Our report shows that the average property is now taking seven weeks to sell across the country, and our agents are reporting that the time then required to bring the sale to completion has increased noticeably in recent months due to changes in the mortgage process."
The amount of cash purchasers in the national market has fallen from 50pc to 40pc nationally in the past three months.
While some Dublin values are under pressure, property in Louth is taking off, with selling prices in Drogheda rising by more than €22,000, or 12.98pc.
Read more: Residential house building falls by 50pc
"The average three-bed semi price in the commuter counties and other major cities has continued to rise by 1.23pc since March and now stands at €202,882 as buyers seek out affordable commutable housing," said Mr Farrell.
"We are also seeing a continued improvement in what we term tier three, the rest of the country, where prices have risen by 1.32pc in Q2 to €119,828.
"Supply is still a major issue for agents, with micro markets existing in counties such as Meath, based on the availability of suitable family homes," he added.
One of the biggest annual rises has been in Kerry towns, where a booming tourist industry has revitalised the market.
In Killarney, prices have risen by €20,000 in the past three months to €210,000, while sales in Tralee are showing 4pc growth in 12 weeks.