But Dublin is likely to lag behind the rest of the country according to the latest house price survey from MyHome.ie.
The data shows that having declined towards the end of 2015, asking prices for newly listed properties for sale rose by 2.1% nationally and by 0.9% in Dublin in the first quarter of 2016, the first gain in Dublin since the first half of 2015 and follows two quarters where prices declined marginally.
The report predicts Irish house price inflation will register another solid gain of close to 5% in 2016, with the rest of the country leading Dublin, due to affordability constraints in the capital.
The mix adjusted asking price for new sales nationally is €220,000, an increase of €5,000 compared to the final quarter of 2015 while the corresponding figure for Dublin is €315,000, an increase of €2,600.
The author of the report, Conall MacCoille, chief economist at Davy, said a key factor supporting house prices this year will be a tighter housing market and he pointed out that the stock of properties listed for sale on the MyHome website in the first quarter fell to a fresh low of 21,650, down 6% on the year.
‘Despite popular opinion, the immediate impact of the Central Bank lending rules was to make it easier to buy as sellers anticipated the slowdown in Dublin house prices and decided to bring their properties to the market in 2015,’ said MacCoille.
‘This won’t be repeated this year while housing supply in the capital is likely to pick up less sharply through the summer months. This is because the ambitious goals set under the last government’s Construction 2020 strategy are unlikely to be attained with no stable coalition yet formed for the new Dail. Overall, home building levels look set to remain depressed for some time and while this will support Irish house prices, it will hurt activity levels,’ he added.
The report’s analysis of the Property Price Register indicates that Dublin and the commuter belt counties last year accounted for 75% of transactions that exceeded €220,000, the threshold below which lenders require a 10% deposit.
Of the 48, 374 residential property market transactions recorded in 2015, just 35% or 16,893 exceeded €220,000. Of these Dublin accounted for 60% or 9,987. Put another way 59% of Dublin transactions exceeded the €220,000 threshold, whereas outside of the commuter counties just 17% of transactions, or 4,300, exceeded that mark.
‘The Central Bank mortgage lending rules have prevented households from reacting to the lack of housing supply by taking on ever more highly leveraged loans and bidding up house prices further. However our analysis shows this has been mainly a Dublin/commuter belt phenomenon where the lack of housing supply is most severe and affordability most stretched,’ MacCoille explained.
According to Angela Keegan, managing director of MyHome.ie, it is very encouraging to see that the rest of the country was leading the rebound in the property market while prices in Dublin were also rising again. She said the low level of transactions remained a major issue.
‘The three bed semi is the most popular house type in the country and the fact that Wicklow was the only county in the country to record a price decrease, and a very modest decrease at that, is very heartening,’ she pointed out.
‘In fact 22 counties recorded price growth while prices remained stable in three others. As the report indicates price growth around the country is now set to surpass Dublin and this levelling effect is a most welcome development,’ she added.
She also pointed out that the analysis of the PPR shows that residential property transactions grew by almost 15% in value terms to €10.7 billion in 2015, up from €9.3 billion in 2014 and €6 billion in 2013.
‘The challenge for the market will be to maintain this momentum in a market where stock is reduced and where the level of new home building is at a very low level,’ Keegan concluded.
