Apartment prices rise as investors swoop in
Apartment prices in Dublin are rising even though property prices in the city are flat.
Tough Central Bank lending rules mean that many families cannot afford to buy homes in Dublin. Some are turning to apartment living, but the rising prices are also believed to be linked to investors swooping to take advantage of rising rents.
Overall residential property prices rose by 8pc in the year to February according to the Central Statistics Office.
This compares with a 7.6pc rise in the year to January, and a 15pc increase in the previous comparable year - to February 2015. But the annual surge masks the fact that residential prices have been flat for three months in the CSO data.
Last month, nationwide values for all property types were completely static at 0pc with -0.5pc recorded in January and a slight 0.5pc rise recorded in December.
Focusing on Dublin, all types of property saw values slide by 0.1pc in February.
The most notable trend in the capital is that the price of houses - the type of property most hit by Central Bank lending restrictions - fell by 2pc through the last three months. In contrast, Dublin apartments, which are sought after by investors, rose 1.5pc in February. Nationwide, apartment rose by a slightly higher 1.6pc.
The biggest rises through the year were recorded for houses outside of Dublin which shot up by 11.5pc compared to the Dublin figure of 4pc.
This also ties in with reports that buyers are left competing for family sized homes outside the commuter belt - a factor which is likely driving prices up.
Overall, property prices stand at 34pc lower nationwide than they were at peak in early 2007 and 37pc lower in Dublin.
However, the CSO figures are based on mortgage lending only, which entails a "lag" of some months between the period when a sale is agreed and when the mortgage is drawn down. They also exclude cash purchases - flaws highlighted yesterday by the Institute of Professional Auctioneers and Valuers (IPAV) in its reaction to the data.
The IPAV chief executive Pat Davitt said: "The national increase of 8pc in the year to February is virtually meaningless since there is a huge divergence in price within each of several different property markets -Dublin, regional cities, regional towns, rural Ireland and second hand versus new builds."
He also pointed out that the barometer does not include cash buyers who comprise about 50pc or more of house sales. "These buyers are eclipsing first-time buyers who cannot reach the thresholds set by the Central Bank mortgage regulations. "We are in a seriously dysfunctional market in terms of value, production and house sales turnover," he said.