Double digit annual growth in asking prices in Ireland expected to continue in 2018
While asking prices have continued to rise in Dublin, albeit at a lower rate, the growth rate paused in the rest of Ireland in the third quarter of 2017, the latest house price report shows.
The mix-adjusted price on newly listed properties in Dublin rose by 1.6% and is up 11.8% on the year while nationally prices rose by 0.4% and are up 8.9% year on year, according to the data from MyHome.
The data also shows that the mix adjusted asking price for new sales in Dublin is now €366,000, an increase of €39,000 on this time last year. The corresponding figure nationally is €253,000, an increase of €21,000. Newly listed properties are seen as the most reliable indicator of future price movements.
For the entire stock of properties listed for sale prices rose 1.7% in Dublin and 1.6% nationally. The national mix adjusted figure is now €228,000 while in Dublin its €319,000.
The author of the report, Conall MacCoille, chief economist at Davy, said the acceleration in asking prices which began in late 2016 has continued through 2017 and is likely to continue through 2018.
‘At the start of the year we predicted double digit growth in house prices for 2017 but due to the strength of asking price inflation in the third quarter we are predicting that double digit inflation is also likely to persist through 2018,’ he explained.
He pointed out that there are a number of reasons why house prices are rising so strongly and these include the lack of supply, the economic recovery and the fact household incomes are now rising by 2% to 3% per annum.
However the key factor driving house prices higher has been the mortgage market. The average loan drawn down by first time buyers in the last quarter was up 9.4% in the year to €200,000 from €183,000 in the middle of2016.
‘This has meant that leverage on new mortgage loans has increased and with ever more desperate buyers seeking larger loans as they compete for the few properties listed for sale, this trend is set to continue and to ensure inflation remains at double digit level,’ MacCoille added.
He also pointed out that the figures provided a challenging backdrop for the Government heading into the 2018 Budget. ‘Measures to boost supply have had limited results so far. Neither will the crisis be solved by tax incentives or subsidies for the construction sector that will almost inevitably lead to higher land prices,’ said MacCoille.
‘With limited progress on planning, inadequate land supply and inappropriate constraints on building heights, Ireland’s housing crisis clearly will not be solved in the near future,’ he added.
The figures also show that at the end of the third quarter there were just 21,424 properties listed for sale on the MyHome website, down 6.5% on last year and just 1.1% of the total housing stock of two million homes.
The situation improved slightly in Dublin where the number of properties for sale rose by 3.3% to 4,275. However this is represents an even smaller total of 0.9% of the housing stock in the capital.
The lack of supply is also reflected in the time it takes to sell a house. The average time to go sale agreed in the third quarter was four months, split between 4.6 months outside the capital, but just 3.1 months in Dublin.
Despite the tightness in the market, transaction volumes are currently running 10% ahead of where they were last year and at this rate will be close to 55,000 transactions.
‘This is a positive development but we are still some way off the 90,000 or so transactions which one would expect to see in a properly functioning market,’ said Angela Keegan, the managing director of MyHome.