Property boom fails to catch on outside the capital
PROPERTY prices are set to continue rocketing in Dublin, but remain weak in the rest of the country.
Economists said a shortage of supply on the east coast was causing prices to spiral, but excess housing everywhere else would mean only a muted recovery in other parts of the State.
The experts were responding to new figures showing a 6pc jump in values nationally in the year to October.
The Central Statistics Office (CSO) also said there was a 15pc surge in the selling prices for houses and apartments in Dublin. This is the highest rise in Dublin since 2006.
It was the third month in a row of double-digit growth in prices for houses and apartments in the capital.
Property prices rose by 1.5pc outside Dublin in October, but were down 1pc when compared with selling prices achieved a year ago. Prices nationally have now risen for five months in a row, driven by strong demand in the capital.
The Society of Chartered Surveyors Ireland, which represents estate agents and valuers, said the price rises in some parts of Dublin were higher than those picked up by the CSO.
This was because up to 60pc of sales are for cash -- sales figures that are not captured in the CSO figures. Translating the figures into euro means that the average property nationally is now selling for €177,000, according to calculations by economist Dermot O'Leary from Goodbody Stockbrokers.
This is down from €332,000 at the peak of the boom in 2007.
For Dublin, the average property is now changing hands at €226,000, half of the level achieved before the market bust.
Outside the capital, continuing price falls mean the average property is selling for €150,000. This is down from €284,000 during the 2007 peak.
Prices outside Dublin have now been falling since March 2008, according to economist with specialist bank Investec, Philip O'Sullivan. He said prices in the capital would continue to rise due to few houses being for sale, but go on falling elsewhere due to oversupply.
"Excess supply in many local markets continues to weigh on pricing, along with weaker economic fundamentals than in the capital," he said.
But Alan McQuaid of Merrion Stockbrokers said the fact that prices have now risen nationally on an annual basis for the past five months was a clear sign the housing market was recovering. He said higher levels of employment would sustain the housing market recovery.
He said there was a need for greater mortgage lending by banks, as too many sales were being completed by cash buyers.
Property Industry Ireland, which represents estate agents, developers and planners, said the increase in prices in October does not "point to the emergence of a bubble".
But he added that there was a clear two-tier market, with prices rising strongly in the capital and continuing to fall outside it. Overall, the value of properties nationally are down 47pc since the peak.
Meanwhile, 1,879 mortgages were approved in October, up 12pc on the year, and 12pc on the month, according to the Irish Banking Federation.