herald

Friday 15 December 2017

No sign of slowdown in house prices as they rise by 25pc

For sale signs in Dublin
For sale signs in Dublin

House prices in Dublin have increased by nearly 25pc compared to a year ago.

New figures from the Central Statistics Office (CSO) show that they rose by just over 3pc last month.

In the year to October, property prices increased by around 16pc at a national level, according to its Residential Property Price Index.

Meanwhile, apartments were nearly 27pc higher in the city, when compared with the same month last year.

However, the latest figures from the CSO show that prices are still not anywhere near the levels they were at their peak in this country.

Prices in Dublin are nearly 36pc lower than at their highest level in early 2007.

Meanwhile, apartments in the capital are 44pc lower than they were in February 2007, the figures reveal.

It was the 17th month in a row of rises in prices nationwide. However, the price increase in property nationally at around 8pc since last October, remains well below that experienced in Dublin.

Supply

The figures come as a leading expert urged that the supply of new homes remains an imperative for achieving long-term sustainability in the property market.

"Boosting supply is ultimately the key factor for sustainable price growth in the long-run. In this regard, it is positive to note Minister Alan Kelly's social housing plan," said Dr John McCartney, Director of Research at Savills Ireland.

He said that the pipeline of new home construction is still far below what is required and this can only be rectified by private sector development.

"We need to be building 25,000 new homes across Ireland each year but, at the moment, large-scale private housing construction is not commercially viable in many locations," he said.

Mr Kelly said that unless steps are taken to mitigate construction costs - for example by cutting local authority development levies or reducing VAT on new homes - the only way private sector development can take place is if prices rise considerably further.

"But further sharp price increases are not necessarily what we want at this point," he said.

Looking forward, a scaling-back of investor demand should lead to a dampening in the rate of house price growth.

The past two years has seen strong demand from cash-rich investors, who have been willing to pay more due to capital gains tax (CGT) incentives, he said.

fdillon@herald.ie

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