Tuesday 21 November 2017

Prices in Dublin stall amid uncertainty over mortgage rules

Property prices in the capital have stalled
Property prices in the capital have stalled
Mark Keenan

Mark Keenan

Property price increases in the capital have stalled with uncertainty surrounding new Central Bank lending rules being blamed.

Values in Dublin increased by less than 1pc in the last quarter of 2014 - while at least one area has now started to register falling prices.

The Average House Price Index produced by the Real Estate Alliance blames confusion and uncertainty created by the initial unveiling of Central Bank measures to curb lending.

These included proposals for a 20pc deposit requirement and 3.5 times income. While the measures have recently been announced and clarified, there were several months during which the Bank's plans remained unclear.

The first location to experience a fall in values in Dublin is Lucan, the large western outer suburb where three-bed semi detached homes are the staple.

Average prices for semis there fell by almost 7pc from €300,000 back down to €280,000 in the third quarter.

All other areas in the city were flat during the tail end of 2014, except for South Dublin where they increased 5.56pc, and the city centre where prices rose 3.45pc.

Increase

"Following an increase in property values of up to 30pc over the previous 15 months, the market in Dublin took a breather in the last quarter," said Real Estate Alliance CEO Philip Farrell.

"Much of this was due to the air of uncertainty that surrounded the introduction of the new Central Bank lending restrictions, and now that we have clarity here, we should see a return to a more normal market.

For the full year, prices for Dublin semis rose overall by 21.66pc increase over the year."

The average three-bed semi in Dublin is now selling at €379,167, an increase of just over €3,000 on the third quarter of last year.

The uncertainty around Central Bank measures has also impacted on the average time it takes to sell a home in the capital. South County Dublin saw the average time to sell increase by 14 days, from four weeks to six weeks.

Meanwhile selling time in Central Dublin has increased in the last three months of the year from five weeks to six weeks.

In North County Dublin it now takes 10 weeks to sell a property compared ten weeks also in the previous quarter, but a week longer than it took in the second segment of the year.

However REA believes the market will now settle down to more sustainable value increases.

"Our agents in Dublin expect prices to rise by 6pc this year. This is in comparison to our nationwide average expectation of a 9pc rise in property prices in 2015.

Cities

"Traditionally the capital is the first to rise and slow down in any turning market, and we have seen this in Q4, particularly in popular first-time buyer markets like the Lucan area," he said.

The Dublin average price is still almost twice that of the commuter county stock, and 2.5 times that of the average rural semi, which is priced at €147,587.

The national survey published in the Irish Independent earlier this week showed that in all areas of Dublin, parts of Cork City, Galway City, North Wicklow and Kildare, the price of the average semi detached house exceeds the Central Bank's new threshold of €220,000 at which banks can lend 90pc of the value," said Philip Farrell.

The biggest annual rise in values overall was in the commuter counties and large cities such as Cork and Galway.

Overall price of an average three-bed semi in Irish towns and cities rose by 20.68pc overall in 2014.

The average semi detached house nationally now costs €184,713, the latest REA survey has found - a rise of 2.63pc on the Q4 figure of €179,981.

The Real Estate Alliance Average House Index concentrates on Ireland's typical stock home, the three-bed semi, giving an accurate picture of the property market in towns and cities countrywide.

Irish Independent

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