House prices outside Dublin are rising rapidly as a result of the Central Bank lending rules brought in last year.
According to the latest Daft report, prices in commuter counties and beyond have risen by more than 10% in the year to June 2016, while they have remained relatively stable in Dublin.
Nationally, prices rose by an average of 6.3%. Prices in Dublin stayed almost level, with a 1.1% increase.
The national average asking price for a house is €215,000, compared to €202,000 a year ago and €164,000 at its lowest point, while in Dublin it is more than €314,000.
In Dublin, prices have risen by an average of €94,000 – or 42% – from their lowest point in mid-2012. Outside Dublin, the average increase has been €43,300, or 32%, since the end of 2013.
Compared to the same period in 2015, prices in the second quarter of 2016 were 11.2% higher in Cork and 14% higher in Galway. In Limerick city, the increase was 15.2%, while in Waterford prices rose by 17.4% in 12 months. Inflation outside the cities varies from 9% in Munster to 12% in Connacht-Ulster.
Daft economist Ronan Lyons said: “The rate of (house price) inflation is increasing outside of Dublin, and what that shows is that Central Bank rules that were brought in have had the biggest impact in the most expensive market,” he said.
“That’s what the Central Bank would have wanted, but it has also meant demand has been reshuffled, so to speak, and people are looking at less expensive places to buy because of the new rules.
“Whereas prices are now falling in year-on-year terms in markets like Dublin 6 and South County Dublin, they are rising by roughly 5% a year in areas like Dublin 10, Dublin 11 and Dublin 12.”
The total number of properties for sale nationwide recorded a rare increase between March and June. Having reached a nine-year low in March, at less than 24,000, the total number of homes for sale in June was 25,260, roughly 15% below the same month in 2015.
Average list price and year-on-year change – major cities, Q2 2016:
dDaft.ie House Price Report: Q2 2016 – An infographic by the team at daft.ie
MyHome.ie confirms the trend, with newly listed properties rising by 5% nationally. Newly listed properties in Dublin rose by a more modest 3.6% – four times the 0.9% increase recorded in Dublin in Q1.
The author of the report and chief economist at Davy Conall MacCoille said the supply shortage and wage inflation were the key factors underpinning the latest price surge.
He said: “The number of homes for sale is down 6.7% on last year to 23,520, which is close to historical lows. Not surprisingly properties are selling increasingly quickly with the average ‘sale agreed’ time falling to just four months, a new low.
“Outside of Dublin it has fallen to 4.8 months, the first time it has fallen below five since the financial crisis of 2008. While the government has outlined ambitious housing plans, there is no prospect of the shortage of housing supply being alleviated by new construction in the near term.”
He added the MyHome.ie data suggests house prices will continue to grow sharply through 2016.
