Annual house price inflation eased to 8.6 per cent in August, down from 10 per cent the previous month, according to the latest official figures from the Central Statistics Office (CSO).
This was the lowest level of inflation recorded in nearly two years, and is consistent with other measures indicating a gradual slowdown in price growth.
In Dublin, where housing demand is greatest, annual price growth of 6.1 per cent was recorded, down from 7.4 per cent the previous month.
The highest house price growth was in Dún Laoghaire-Rathdown at 9 per cent. In contrast, the lowest growth was in south Dublin, where house prices increased by 5 per cent.
The figures show the median price paid for a residential property in the current market was €240,000. Dublin was the region with the highest median price (€363,000), while Dún Laoghaire-Rathdown had the highest median price (€525,000) of the four Dublin administrative areas.
Outside Dublin, the Border was the region with the lowest median price for a dwelling (€120,000).
The figures, which also break down prices by Eircode, show the most expensive Eircode area to purchase a house was D04 “Dublin 4”, with a mean price of €803,263. The second most expensive Eircode area was D06 “Dublin 6”, where the mean price was €752,140. The least expensive Eircode area within Dublin was D10 “Dublin 10”, with a mean price of €224,926.
Since early 2013, prices across the Republic have increased by 81.1 per cent, while Dublin prices are up by 94.5 per cent from their February 2012 low.
Prices outside the capital have been slower to recover but are still 76 per cent higher than their trough in May 2013.
“While the gap between property demand and supply appears to be narrowing of late, resulting in a gradual easing in Irish property price inflation, there is still some distance to go before price trends are indicative of a balanced Irish property market,” said KBC Bank chief economist Austin Hughes.
“How bumpy that path might be depends not only on the general economic environment but, critically, on the nature and extent of future policy interventions.
“While measures to boost supply somewhat might be warranted in Budget 2019, the market would likely be hurt rather than helped by ‘shock and awe’ measures or policies which materially boost demand.”
Adjustments needed
Rachel McGovern of umbrella group Brokers Ireland said while in overall terms it was positive that the high levels of house price inflation have tapered back, particularly in Dublin, at the same time adjustments to the Central Bank mortgage lending rules were “needed and justifiable to address some market distortions.”
“The exemptions allowed under Central Bank mortgage rules have tended to run out earlier in the year, meaning a prospective borrower who would not qualify for an exemption at this time of year may very well, with no change in circumstances, qualify come January.”
She said the exemptions have become critically important for many borrowers because the 3.5 times gross salary loan-to-income (LTI) threshold, along with the 80 per cent LTV (loan-to-value) that applies to second and subsequent buyers (SSBs) but not first-time buyers, are too restrictive.
The Institute of Professional Auctioneers and Valuers said the latest CSO data pointed to “the severe shortage of new properties for purchase”. Chief executive Pat Davitt said just 18.7 per cent of purchases filed with the Revenue Commissioners for August were for new dwellings. “Until that figure ramps up, sadly, we will continue to be dealing with a housing crisis.”
