herald

Monday 23 October 2017

Property hikes are 'not a sign of new bubble'

DESPITE the huge hike in Dublin house prices this year, a ratings agency claims we are not re-entering a property bubble.

Shocking figures released last week indicated that the cost of Dublin homes were jumping by around €220 a day.

But ratings agency Standard and Poor's has predicted that despite the growing housing crisis in the capital, the revival in the market will slow considerably next year.

The agency highlighted that prices in the capital are skewing figures for the country as a whole.

"Prices are now 26pc higher than their low point in August 2012, compared with just a 3.2pc rise in the rest of the country from their low point in March 2013," said the agency.

The agency expects house prices to rise by 4pc this year, but to slow to 2pc in 2015.

Tight lending conditions and high mortgage arrears will lead to the shrink in growth, according to the group.

As for fears that the market is recreating a property bubble - particularly in the capital - experts say that prices are still almost half of what they were at the height of the boom in 2007.

John McCartney, head of research at Savill property company, is less sure about the drop off in price hikes next year.

"We are in a very strange situation at the moment with prices showing really strong growth but with levels of transactions still very low," he said.

low

In the first quarter of 2014, there were only 6,500 housing transactions in the country.

The main reason for such a low number, according to the property expert, is that there are not enough houses being built, particularly family homes.

"Last year only around 8,300 houses were built, when really we need to be returning to 2009 levels," he noted.

hnews@herald.ie

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