Asking prices for houses outside Dublin rose sharply in the second quarter of 2016, with prices in the capital rising more modestly, according to separate reports from property websites MyHome.ie and Daft.ie.
MyHome.ie said asking prices for newly listed properties rose by 5.2 per cent in the second quarter, driven by a recovery in prices outside Dublin. Newly listed properties in Dublin rose by 3.6 per cent, said the company, which is owned by The Irish Times Limited.
MyHome.ie’s second-quarter property report found that the national mix-adjusted price was €213,000, up 2.5 per cent on the previous quarter, while in Dublin, the corresponding figure is €296,000, up 2 per cent. These average prices relate to the entire stock of properties listed for sale on the website, rather than only those newly listed.
Divide persisting
Daft.ie’s report suggests house prices rose by an average of 6.3 per cent nationally in the year to June 2016.
It said the divide between Dublin and the rest of country was persisting, with prices effectively stable in the capital, rising by 1.1 per cent, while prices outside Dublin advanced 10.2 per cent.
“Compared to three months ago, there has been a sharp uptick in inflation outside the capital,” Daft.ie said. On an annual basis, prices were 11.2 per cent higher in Cork, 14 per cent higher in Galway, 15 per cent higher in Limerick city and 17 per cent higher in Waterford.
A shortage of properties and wage inflation are the key factors underpinning the rise in house prices, said the author of the MyHome.ie report, Davy chief economist Conall Mac Coille.
“The number of homes for sale is down 6.7 per cent on last year to 23,520, which is close to historic lows. Not surprisingly, properties are selling increasingly quickly with the average ‘sale agreed’ time falling to just four months, a new low,” he said.
Shortage
“Outside of Dublin, it has fallen to 4.8 months, the first time it has fallen below five since the financial crisis of 2008.”
Mr Mac Coille said there was no prospect of the shortage of properties being alleviated by new construction in the near term, while homebuyers were reacting to the lack of supply by taking out higher mortgages.
The economist said the data suggested there would be further gains in Irish house prices throughout 2016, but the impact of the UK’s vote to leave the EU remained “something of a wild card” and could help to temper expectations for house price growth next year.
Angela Keegan, managing director of MyHome.ie, said the high rises in asking prices in Cork and "standout performer" Galway suggested the recovery was gaining traction around the country, but she added that the low level of transactions remained a concern.
The volume of transactions in 2016 is likely to grow at the slowest rate in many years, Ms Keegan said. “If they expand at all, the growth rate will probably be a subdued 5 per cent.”
House prices peaked in 2006 and, after a severe crash, began to climb again in Dublin in 2012 and the rest of the country in 2013. When prices eventually began to rise outside the capital, they did so at a more sluggish pace than in Dublin. This trend has now been reversed.
Central Bank deposit rules for mortgage borrowers have likely had an impact in the capital. Daft.ie's figures indicate a national average asking price of €215,000 in the second quarter, close to the figure suggested by MyHome.ie.
