Property price growth set for further slowdown this year, says ratings agency
House price growth is to slow down sharply in Dublin over the next 18 months.
Central Bank lending limits and uncertainty over Brexit are combining to ensure prices will rise by about 3pc this year, well down on the average of 12pc until recently.
Meanwhile, average property prices are a "staggering" nine times above the average salary.
Ratings agency Fitch says Government initiatives to increase the supply of new homes will not be effective enough to quickly meet demand. Prices are set to rise by around 3pc again in 2020.
This is close to the 4pc in residential property prices last year, but well down on the average year-on-year growth of 9pc that preceded this from the middle of 2016.
Potential buyers are unable to get mortgages because of the Central Bank lending limits and rising prices. These limit borrowings to three-and-a-half times income, with a minimum deposit of 10pc of the property's value needed by first-time buyers.
Fitch said mortgages approvals fell 3.4pc in January compared with the previous year.
This was at a time when the "median value of properties was a staggering nine times above the average salary". The average deposit for a Dublin home for a first-time buyer is now €38,000.
Author Sanja Paic said Brexit could lead to higher prices, but it could also mean some buyers hold back, particularly if jobs are threatened by a no-deal.
Continued Brexit uncertainty could also lead to buyers delaying purchases, as there may be a risk to their jobs.
Fitch said supply is increasing but a quarter of the new homes being built are selling for more than €350,000, targeted at higher earners.
Government initiatives to increase construction, such as the help-to-buy scheme, will not be effective quickly enough to meet demand, the ratings agency said.