herald

Tuesday 22 August 2017

Housing bubble in capital grows by 25pc in 12 months

THE housing price bubble shows no signs of bursting as prices in the capital have shot up by 25pc in the last year alone.

The new figures released from property website daft.ie found house prices nationally have risen by 14pc.

And the rise was most acutely felt in Dublin, with rises of between 18pc in north county Dublin and up by a massive 29pc in the city centre.

However, the average price for a house in Ireland is €195,000 - just over half of the average price during the peak of the boom. It also compares to an average price of €170,000 a year ago.

The cost of homes right across the country has increased in most major urban centres, with the exception of Limerick city, where there was a fall of 4pc. Cork and Galway cities saw prices jump by 11pc and 13pc respectively over the course of a year, while Waterford city experienced a 3pc rise.

But the report published this morning points out that the number of properties available, at just over 30,000, is the lowest figure since March 2007.

Ronan Lyons, economist with daft.ie, said that across Leinster, and in Dublin in particular, supply shortages remain. He said this has helped push up values by a third in Dublin in just two years.

"The concern is that this supply shortage is now feeding into expectations. While price rises driven by shortages can be stopped by increasing supply, tackling price rises driven by expectations is significantly trickier," he added.

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The report also surveys the sentiment and expectation of over 1,000 potential home buyers across the country, with respondents in Dublin stating that they expected prices to continue rising over the next twelve months by an average of 12pc. This is the largest expected rise since the survey began in 2011.

Mr Lyons said that regulators need to set a maximum loan-to-value, and potentially also the maximum loan-to-income, in order to ensure a healthy housing sector.

"But the Central Bank's work is not done there," he added.

"It needs to address the preponderance of variable rate mortgages in Ireland."

hnews@herald.ie

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