House prices in Ireland expected to rise by around 5% in 2019

House prices in Ireland are expected to rise by around 5% in 2019 after slowing sharply in the third quarter of 2018 before stabilising in the last quarter of the year, the latest research suggests.

Overall values increased by 6% last year and sales also saw strong growth, up 5% while the overall value of sales increased by around 20%, according to the latest house price report from MyHome.ie.

The report, which is published in association with Davy, predicts that robust demand and rising incomes will continue to push house prices higher once the uncertainty of Brexit has been resolved.

While asking prices nationally fell back by 0.9% and were unchanged in Dublin in the fourth quarter of 2018, as per normal seasonal trends, the annual rate of inflation nationally was 6.1% while it was 3% in Dublin.

This means the median asking price for new sales nationally is €266,000, down €2,000 from the previous quarter while the price in Dublin remains unchanged at €375,000. Newly listed properties are seen as the most reliable indicator of future price movements.

The report also shows that the average time to sale agreed remains relatively stable at four months nationally and three months in Dublin.

The author of the report, Conall MacCoille, chief economist at Davy, said the overall picture is that the recent slowdown has evened out, housing supply is slowly picking up, even if it remains well short of demand, and liquidity is slowly improving off a low base.

‘Predictions that the Dublin market would contract have proved wide of the mark, perhaps because too much attention has been paid to more expensive property types and areas. Suggestions that the tightening of the Central Bank lending rules would cause the market to stagnate have also proved to be well wide of the mark,’ he added.

Looking ahead in 2019, MacCoille believes that the Irish banks will soon have fresh allocations of high loan to income (LTI) mortgage loans, exceeding the 3.5 times multiple,.

‘While 2018 was associated with an adjustment to the tighter CBI lending rules and slowing house price inflation, we expect 2019 will see robust demand and rising household incomes continue to push prices higher, albeit at more moderate levels, once the uncertainty of Brexit has been resolved,’ he pointed out.

Angela Keegan, managing director of MyHome.ie, believes that 2018 will be remembered as the year when the stock of both new builds and second hand homes turned the corner and she revealed that there are over 21,700 homes currently listed for sale. ‘While this is still far too low to meet demand, it is an increase of 15% on last year. In Dublin there are 5,000 homes listed for sale, up 44% on the 3,500 this time last year,’ she said.

She pointed out that the underlying picture is that home building is picking up. In total over the past 12 months planning permissions have been granted for 29,500 units, some 70% higher than the current level of home building. However, this is still short of the 35,000 needed to meet demographic pressure.