South Dublin inflates mini property bubble
Asking prices surge 12 per cent on dearth of homes in capital
The first "micro bubble" in the residential property market in six years is under way in South Dublin with house asking prices surging by 12.2 per cent in the last year.
The latest report by daft.ie, which is now regarded as the most accurate barometer of house transactions, suggests that it's the first time asking prices have increased at such a rate since the heady days of the first three months of 2007.
What is most encouraging is that while asking prices have risen, the number of houses actually sold has also increased, according to the latest statistics compiled by the Property Services Regulatory Authority.
Between January and the end of March, just under 8,500 transactions were registered with the authority, 2,777 in Dublin.
Those figures suggest that the number of residential properties sold in the first three months of this year is about 13 per cent higher than the same period in 2012.
The buoyant market in South County Dublin, traditionally the most expensive part of the country in which to live, lifted the overall residential property market in the capital. Asking prices for properties in Dublin as a whole are on average more than five per cent higher than a year ago, according to daft.ie.
But the micro bubble has yet to spread to the rest of the country – though there are signs of some stabilisation. The rate of fall has slowed.
For the country as a whole, asking prices fell by 6 per cent in Leinster, 11 per cent in Munster and 12 per cent in Connacht-Ulster over the last 12 months.
And despite the improvements in Dublin, the average price of a house nationally is still 54 per cent below what it was in early 2007 – though commercial property sales are on the rise, fuelled by foreign investors who have spotted value in the moribund Irish market.
MyHome.ie also posted encouraging statistics for house sales in South Dublin – though they put the spike at a more modest 3.9 per cent and a 1.1 per cent increase in Dublin overall.
There is a shortage of properties in South Dublin, especially family-sized three- and four-bedroom homes, which is leading to increased competition.
Another factor is that there are tentative signs at least that the financial institutions are beginning to approve more mortgages.
The Irish Banking Federation confirmed that there were a total of 1,722 mortgages approved by lenders in May, with a value of €294m. That's a five per cent rise in the number of mortgages approved compared with May last year.
Just over €600m was invested in commercial property during the first six months of the year. That's way ahead of 2012, when €557m was spent during the full 12 months.
Among the high-profile sales that have boosted overall commercial property transactions was the landmark deals to secure the Burlington Hotel in Ballsbridge, Dublin, and the Morrison Hotel on the northside quays of the Liffey.
On the residential sector, daft.ie economist Ronan Lyons said the market was now in the middle of a "great divergence" as the Dublin market surges ahead of the rest of the country.
"This is certainly the first time such rapid growth in asking prices has been recorded anywhere in the country for almost six years," he said.
"The underlying cause is a lack of supply in the capital, while demand has steadily been rising.
"The number of transactions in Dublin in the six months to March was 4,300, according to the Property Price Register," he said.
"This compares to 3,000 for the same period to March 2012 and 2,500 in the six months to March 2011," Mr Lyons added.