Irish property prices to increase by at least 8% in 2017
Property prices are set to rise by at least 8 per cent in 2017, with double-digit growth a “distinct possibility”, as today’s launch of the new help-to-buy scheme, plus looser mortgage lending rules and constrained supply drive price growth across the country.
The prediction comes in a report from myhome.ie, the property website, and Davy, the stockbroking firm, which says the help-to-buy scheme will add “fuel to the fire” in driving price growth.
The scheme, which opens for applications today (January 3rd), will give first-time buyers of new homes 5 per cent back on the cost of their property.
According to the Central Statistics Office, property prices rose by 7.1 per cent in the year to October, while full-year calculations from estate agent Sherry FitzGerald, also published today, estimate that prices rose by 5.2 per cent for 2016 as a whole, a moderate increase on the 4 per cent recorded in 2015.
Prices in Dublin increased by 3.7 per cent in 2016, compared to 1.4 per cent in 2015, according to Sherry FitzGerald with growth of 7.4 per cent, 10.1 per cent and 6.9 per cent respectively in Cork, Galway and Limerick.
Despite recent price growth, however, average values are still about 40 per cent off peak 2006 levels.
Fall in supply
Predictions of an acceleration in house-price growth next year comes as the number of properties for sale across the country has fallen to a 10-year low.
New figures from Daft.ie, also published today, show just 21,700 properties for sale nationwide on the property portal in December 2016, the lowest since January 2007.
Myhome.ie reports a similar picture, with just 20,875 properties listed for sale on the site, down 7.7 per cent from last year.
This suggests that just 1 per cent of the Irish housing stock is currently listed for sale – a normally functioning market would typically boast turnover levels of 4 per cent.
“The lack of liquidity is particularly acute in Dublin where there are just 3,619 properties listed for sale.
“This is down 20 per cent on last year and means just 0.7 per cent of Dublin’s housing stock of 535,000 properties is currently listed for sale,” says Angela Keegan, managing director of myhome.ie.
Trinity College Dublin economist and author of the Daft.ie report Ronan Lyons warns that demographic trends, housing obsolescence and migration means that close to 50,000 new properties are needed each year – but just about 14,000 were built in 2016.
“Without this kind of supply, we will all have to spend more and more of our income just to have a home,” he warns.
With fewer homes for sale, transaction levels are also slumping. While the full figures for Q4 are not yet available from the property register, early returns suggest a sharp fall in transactions in the final quarter of 2016, with sales down by 12 per cent on the year, according to Daft.ie.
But the decline may also be due to the imminent arrival of the new help-to-buy scheme, as prospective purchasers postponed their decisions.
The latest survey from Daft.ie for the fourth quarter of 2016 shows that asking prices across the country rose by 8 per cent in the year, with prices continuing to rise at a faster rate outside the capital.
Asking prices in Dublin were 5 per cent higher than in 2015, but in Cork, Galway and Kilkenny, inflation exceeded 10 per cent, although the rate of growth has fallen since 2014.
The figures mean that the average national asking price has risen 34.3 per cent – or just over € 56,000 – since the property market reached its nadir in the third quarter of 2013.
In Dublin, however, the bottom was reached in the second quarter of 2012 and prices have risen by an average of 46.2 per cent – or €101,850 – since that time.
In Limerick, prices have risen by 39 per cent in the city (and by 19 per cent in the county) since its low in 2014.
According to myhome.ie, while asking prices on new instructions fell by more than 2 per cent in the fourth quarter, bringing the mix adjusted asking price for new sales nationally to €227,000 – prices on their site are still up 5.5 per cent year on year.
In Dublin, the average asking prices for a newly listed property remained unchanged at €328,000, but this is still up 4.9 per cent year on year, according to myhome.ie.