Irish Residential Property Prices (August 2018)

• Residential property prices up 0.3% in the month and 8.6% in the year
• Dublin house prices up 5.5% on an annual basis
• House prices in Rest of Ireland up 10.8% year-on-year
• Overall residential property prices still down 18.9% from the “Celtic Tiger” peak

Property prices post annual rise of 8.6% in August, down from 10.0% in July

In the year to August, residential property prices (houses and apartments combined) at a national level rose by 8.6%, down from the revised annual increase of 10.0% (10.4%) posted in July, and the lowest year-on-year rise since October 2016. In Dublin, residential property prices rose by 6.1% in the year in August. Dublin house prices increased 5.5% whereas apartments rose 9.3% in the same period. The highest house price growth in August was in Dún Laoghaire-Rathdown, at 9.0%. In contrast, the lowest growth was once again in South Dublin, with house prices rising 5.0%.

Residential property prices in the Rest of Ireland (i.e. excluding Dublin) were 11.4% higher in the year to August. House prices in the Rest of Ireland rose 10.8% over the period. The Mid-West region showed the greatest price growth, with house prices increasing 21.5%. Conversely, the Border region showed the least price growth, with house prices rising 6.1%. Apartment prices in the Rest of Ireland increased 16.4% in the same period.

Overall, the national index is still 18.9% lower than its highest level in 2007. Dublin residential property prices are 21.5% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 23.5% lower than their May 2007 peak.

From the trough in early 2013, prices nationally have increased by 81.1%. Dublin residential property prices have risen 94.5% from their February 2012 low, while residential properties in the Rest of Ireland index have increased 76.0% from their lowest point, which was in May 2013.

It will be interesting to see what new initiatives are announced as regards housing in today’s Budget. First-time buyers continue to be priced out of the market. Subsidising purchasers through tax breaks is not the answer. But at least, new supply is coming on stream. Based on the new official CSO data, a total of 19,000 new dwellings completed is forecast for 2018, rising up to 25,000 in 2019. So, it is a case of trying to be patient.

However, as we wait for more houses to be built, residential property prices will continue to rise, although anecdotal evidence suggests house price growth may have started to ease, especially in Dublin. Still, we see house price growth staying in positive territory on a year-on-year basis for the immediate future. The biggest rise this year is likely to come from outside the capital, with the asking price for houses in more expensive areas rising at a slower rate.

Changes to Central Bank rules mean that in more expensive areas, the trend of increasing house prices will not be as pronounced. Previously up to a fifth of mortgages were allowed to exceed a loan-to-income ratio of 3.5. But this has become even tighter this year with only 10% of those trading up allowed to breach that rule. The allocation remains unchanged for first-time buyers. Dublin prices will be out of reach for more borrowers as a result, while in other areas where buyers will not need to borrow as much, prices will see stronger growth.

Residential Property Prices (Source: CSO)
S.A. Indices
(Jan 2005 = 100) Property Price Index % Change Month % Change Year House Price Index % Change Month % Change Year
2017 August 97.9 1.6 11.8 101.0 1.4 11.6
2018 June 105.3 1.0 11.9 108.4 1.0 11.5
2018 July 106.0 0.7 10.0 109.2 0.7 9.6
2018 August 106.3 0.3 8.6 109.4 0.2 8.3

Table 2.1: Household market transactions filed with Revenue
Month Volume Value (million) Median Price Mean Price
June 2018 3,349 €976.5 €250,000 €291,573
July 2018 4,104 €1,206.7 €250,000 €294,036
August 2018 3,944 €1,177.9 €250,000 €298,659
Source: CSO

Alan McQuaid (9/10/18)
Economist