Property price surge sparks new housing bubble fear
Up to 100 people turning up for each viewing in south Dublin
A MASSIVE jump in property prices in Dublin has prompted fears of a new housing bubble developing in the capital.
A shortage of family-type homes in Dublin, particularly in the south of the city, means that people are being priced out of the market.
Property experts report that up to 100 people are showing up for each viewing, such is the demand for even modest three-bed properties.
The jump in prices on the east coast is in contrast to the rest of the country where price changes are muted.
Prices in the capital city and its suburbs shot up by 8pc in the year to July.
In the month of July alone prices jumped by 3.3pc – the highest price rise for eight years.
Apartment prices rose by even greater amounts as buyers compete for a limited number of properties.
The Central Statistics Office (CSO) said prices nationwide were up 2.3pc, compared with July 2012.
It was the second month in a row that prices have risen nationally.
And one leading estate agency said the figures from the CSO actually understated the rises.
Director of research at Savills John McCartney said agents on the ground were reporting price increases of up to 20pc in some prime residential neighbourhoods in south Dublin.
"This is partly being driven by a severe shortage of properties for sale, but we expect the higher selling prices to tempt more homeowners into the market in the traditional September to November selling season, which will help to underpin the market."
He said that properties that suited families were attracting a large number of potential buyers who were outbidding each other.
And broker Karl Deeter said thousands of people with mortgage approval were finding that Dublin prices were moving beyond the amount the banks were prepared to lend them.
Mr Deeter said the scarcity of housing was creating a new housing bubble in the greater Dublin area.
He called for investor properties that were in arrears to be repossessed by banks to free up homes for families.
Prices were rising in Dublin, despite fewer mortgages being issued this year, Dermot O'Leary of Goodbody Stockbrokers said.
This pointed to price inflation again becoming a feature of the property market.
"The arrival of price inflation may trigger some potential buyers into action," he added.
Chief executive of estate agency DNG, Keith Lowe, claimed prices were rising in all parts of Dublin and not just in the south of the city.
The CSO figures showed that prices for houses in the capital have risen now for seven months running, when compared with the same month in the previous year.
But the rest of the country is still seeing price falls, with decreases predicted for months to come.
An oversupply of houses and apartments in rural areas means that prices are set to keep falling outside the greater Dublin area, economists said.
Economist with Merrion Stockbrokers Alan McQuaid said the improving labour market would sustain a housing market recovery, especially in Dublin.
But he warned: "It may take some time for the rest of the country to pick up."
In Dublin, residential property prices grew by 3.3pc in the month of July and were 8pc higher than a year ago.
Economist with Davy Stockbrokers David McNamara said the monthly rise of 3.3pc in July was the largest since 2005.
He said: "The numbers for Dublin look too good to be true."
The CSO figures are based on mortgage drawdown data, but half of houses bought are for cash.
This meant that the CSO figures were not truly reflecting what was happening in the market and were volatile, Mr McNamara said.
Average prices across the country are now €169,000 – around half of the amount they were going for at the height of the booming 2007.
It Dublin, the average house is now changing hands for €209,000, calculations from the CSO figures indicate. This is down from €430,000 six years ago.
Outside the capital, the average property is now selling for €147,852, down from €283,600 at the peak.
Overall, the national property price index is down 49pc from its highest level in 2007.
Trinity College Dublin lecturer Ronan Lyons, who also works for Daft.ie, called for houses to be built in the greater Dublin area to satisfy the pent-up demand.
A rise of 7.5pc in rents in Dublin over the past year pointed to a huge demand for property to rent and to buy, he said.
By Charlie Weston Personal Finance Editor