Shortage of homes for sale to keep prices rising
Property prices bounced back in April after sharp declines in the first two months of the year.
Experts said the rate of increase was moderating, but prices would keep rising this year due to a shortage of homes and a rise in household formation. Values were up 0.6pc in the month and have now risen by almost 16pc in the past year, according to the property price index from the Central Statistics Office (CSO).
Prices have now risen on an annual basis for 23 months in a row. In Dublin residential property prices rose by 1pc in April. Dublin residential property prices were 20pc higher than in April last year.
Residential property prices outside of Dublin rose by just 0.3pc in April. Prices were up 11.4pc compared with April last year, the CSO said.
Prices fell in the first two months of the year on a monthly basis, but have now risen in both March and in April.
The CSO index only includes properties where a mortgage has been issued to buy it, and there is a delay of a few months in the prices quoted as they reflect the date when the sale occurred.
Calculations based on the CSO figures by Goodbody Stockbrokers show properties nationally are changing hands for an average of €207,000, up €28,000 in a year.
In Dublin, properties are selling for an average of €280,000, up €47,000 in a year. Outside the capital, the average property is now worth €166,000, up €6,500 in a year.
Economist with Investec Bank Philip O'Sullivan said: "We expect to see further increases in the residential property price index over the coming months."
He said demand would remain strong due to new household formation, rising employment and earnings, and falling mortgage rates.
But building completions are running at about a third of their long-term average and less than half of what he considers a normal level of activity to be.
Experts said there was a rush to buy at the end of last year due to announcements of new Central Bank lending limits and the ending of tax breaks for investors.
The lending limits are expected to impact the market in urban areas later in the year, but prices will keep rising in the meantime, Juliet Tennent of Goodbody Stockbrokers said.
"Activity in the housing market continues to improve, but remains below 'normal' levels," she said.