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City house prices show fall as buyers look outside capital

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House prices in Dublin have fallen for the first time in nine months.

However, figures from the Central Statistics Office (CSO) showed prices nationwide are continuing to rise.

Residential house and apartment prices were up 0.5pc nationally in November and are now up 16pc compared with a year ago.

The CSO figures showed that in Dublin, house prices fell by 0.1pc, but were still 22pc higher compared with a year earlier.

It is the first drop in Dublin prices since February.

Meanwhile, apartment prices in the city were nearly 27pc higher when compared with November 2013.

The CSO figures show that price growth in Dublin is beginning to soften.

In contrast, prices elsewhere have been increasing for the past seven months, and November saw the strongest rate of price growth outside the capital since June 2007.

Dr John McCartney, the director of research at property consultants Savills, said these contrasting trends reflected the displacement of demand from Dublin to the commuter counties.

"For the last two years cash sales have driven very strong price growth in Dublin," he said.

"However, with cash buyers becoming scarcer, the traditional mortgage-financed buyer has once again become the mainstay of the market.

lending

"Tight bank lending and the price growth that has been experienced in Dublin over the past two years means that affordability is becoming an issue for these buyers."

Dr McCartney said price growth is again driving demand out of the city and into the satellite and commuter belt.

"It is inevitable that this dynamic will cause buyers to look again at properties in the commuter belt, and this is what is driving the continued strong price growth outside of Dublin," he said.

The decline in prices in Dublin comes as the Central Bank readies new measures to restrict lending for first-time buyers, which are expected to dampen property price growth.

House prices in Dublin are still nearly 36pc lower than at their highest level in 2007, according to the CSO's residential property price index.

Meanwhile, the price of apartments in the capital are 44pc lower than they were in February 2007.

The price of residential properties in the rest of Ireland is nearly 42pc lower than at the peak.

fdillon@herald.ie


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