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Friday 20 September 2019

Dublin house prices down for first time in seven years as new homes supply grows

Residential property prices nationwide rose by 2.3pc
Residential property prices nationwide rose by 2.3pc
New dwelling completions increased by 25pc to 18,072. Photo: Elena Elisseeva

Property prices in Dublin have fallen for the first time in seven years.

While they were up in the rest of the country, they fell in the capital by 0.2pc in the year to July for the first time since the end of 2012.

Dun Laoghaire-Rathdown, the Dublin region where properties tend to be the most expensive, saw a far higher decline than the average in the capital, with a drop 6.3pc.

Nationally, residential property prices increased by 2.3pc in the year to July, the Central Statistics Office (CSO) said.

This compares with an increase of 2pc in the year to June.

Border

However, the slowdown in the rate of increase is indicated by the fact that a year ago prices were rising at a rate of 10pc annually. Prices outside Dublin rose by nearly 5pc in the year.

The region outside Dublin that saw the biggest rise in prices was the border, at 16pc, while the smallest rise was recorded in the mid-east at 0.4pc.

Greater supply of new homes has been cited as the reason for the slowdown.

New dwelling completions increased by 25pc to 18,072 last year and are expected to be up again this year.

Overall, the national index is 17.3pc lower than its highest level in 2007.

Dublin residential property prices are 22pc lower than their February 2007 peak, while residential property prices in the rest of Ireland are 20pc lower than their May 2007 peak.

The typical price paid for a home nationwide was €255,000 in the year to July. The Dublin region had the highest median price at €366,000.

Within the Dublin region, Dun Laoghaire-Rathdown had the highest median price at €530,000 while Fingal had the lowest at €337,000.

Cork-based property developer Eamon Hetherington, of GPD Property, said buyers are likely to be nervous ahead of a possible no-deal Brexit.

Despite this, he said single- digit growth is likely during 2020 and beyond.

"Unfortunately, with the very cautious approach taken by the Central Bank to mortgage affordability, too few people can qualify for a mortgage," he said.

Mr Hetherington said the 3.5 times income rule should be increased to 4.5 times where the applicants selects a five or 10-year fixed mortgage product, as there would be no possibility of them suffering from a rate shock over the short or medium term.

There has been a surge of home-buying by cuckoo funds and local authorities, squeezing out first-time buyers.

Latest figures show a fall of 6pc in the purchase of new homes by households this year.

Over the same period, non- household purchases of new homes has shot up by 60pc.

Non-household purchasers are made up of the cuckoo funds, so-called because these investment funds edge out families from the housing market.

Criticised

The category also includes local authorities buying homes as social housing and approved housing bodies.

CSO figures show that so far this year, households bought a total of 4,434 new homes. Non-households bought 1,991.

This means that one in every six homes on the market is now being bought by cuckoo funds and councils.

Goodbody economist Dermot O'Leary said non-household buyers have hugely increased their presence.

"Household purchases of new homes are down by 6pc in the year to date while non-household purchases of new homes are up 60pc in the year to date," he said.

Cuckoo funds have been heavily criticised. They tend to buy blocks of houses and apartments and are seen as pushing out first-time buyers.

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