House prices increased by 5% in Ireland in the second quarter of 2017 and by 8.9% year on year with growth expected to remain strong in 2017 despite the likely abolition of the country’s Help to Buy scheme.
The data from the latest property report from MyHome.ie in association with Davy also shows that in Dublin prices rose by 2.8% and by 10.3% year on year.
The mix adjusted asking price for new sales nationally reached €251,500, an increase of over €24,000 in the last six months while in Dublin it is €360,000, an increase of €32,000.
The author of the report, Conall MacCoille, chief economist at Davy, said house price inflation should remain strong and while acknowledging that 5% was another sharp increase he pointed out that prices do tend to fall back after the busy summer period.
‘The outlook for Irish house price inflation will be primarily driven by robust jobs growth, rising incomes and competition among homebuyers, leading to more highly leveraged mortgage lending,’ he said.
‘The likely demise of Help to Buy could lead to a rush of transactions in 2017 as first time buyers move quickly to avail of the scheme and to a slowdown in 2018 as it is phased out. Nonetheless, the bigger picture is that Irish house price inflation should remain robust, driven by the recovering economy,’ he added.
MacCoille believes that Help to Buy, which helps people buy new homes, has had a significant impact on the housing market, contributing to house price growth and exceeding the uptake that the Government expected with the 1,679 approvals to date costing €24.5 million. He said that this means that the average cash rebate has equalled €15,000, or 5% of a €300,000 newly built home.
‘Given the 7,275 applications received so far, the initial estimate that the scheme would cost €50 million may now seem conservative,’ he explained, adding that as the price of newly built homes are rising much faster than existing homes the evidence suggests it has contributed to house price inflation.
Angela Keegan, managing director of MyHome, pointed out that the continuing tightness of the housing supply situation means houses are being snapped up ever more quickly by desperate buyers and that competition for properties will intensify through 2017.
There were only 21,000 homes listed for sale on MyHome in the second quarter of the year, down over 11% on the year. ‘This means that just 1% of Ireland’s housing stock of two million homes is currently listed for sale. In Dublin where demand is greatest, fewer than 4,000 homes or 0.85% of the capital’s stock is listed for sale,’ she explained.
She also pointed out that it is not surprisingly that the average time to sale agreed for homes has fallen to 3.8 months nationally and just 2.7 months in Dublin, the lowest since the firm began recording these figures in 2011.