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House price inflation flatlines across Ireland

The annual rate of house asking price inflation nationwide has fallen to less than 1%, while in Dublin it has stayed flat, according to the latest house price report from MyHome.ie.

The report, which is published in association with Davy, found that annual asking price inflation has now slowed to 0.72% nationwide. While annual inflation outside Dublin grew by €3,200, quarterly inflation fell by 0.5%.

This means the mix-adjusted asking price for new sales nationally is €267,000, while the price in Dublin is €374,000. Newly-listed properties are seen as the most reliable indicator of future price movements.

Region Mix-adjusted asking price % change quarter-on-quarter % change year-on-year
National €267,000 -0.45% 0.72%
Dublin €374,000 -0.5% 0%
Ex-Dublin €222,000 -0.5% 1.4%

 

Key findings include:

The author of the report, Conall MacCoille, Chief Economist at Davy, said that the slowdown in house price inflation was to be welcomed and was inevitable given stretched affordability.

Central Bank rules have stopped first-time buyers taking out too much mortgage debt and should lead to more realistic asking prices. Our analysis shows that the average residential transaction in Ireland (€292,000) is now 6.8x the average income of €43,000. This is only slightly below the UK’s ratio of 7x. This is the first time since 2012 that Ireland’s house-price-to-income ratio has declined.

While there has been a 13% fall in new instructions to sell and an 11% drop in the total number of homes listed for sale, there are positives in the market. Mortgage lending to first-time buyers is up 15% in the first three quarters and transaction volumes in the €300,000-€400,000 price range are up 7% in the capital,” he said.

“It is also encouraging to see homebuilding completions rose above 20,000 for the first time in the 12 months to September, and housing starts went above 26,000.”

Angela Keegan, Managing Director of MyHome.ie, said it was welcome that clarity was emerging regarding Brexit and Central Bank mortgage lending rules. “For most of the year, we understandably saw prospective purchasers being reluctant to take the plunge due to these two unresolved issues, leading to sluggish house price inflation. The clarity we now havewill likely lead to more settled price expectations and a stabilisation of residential transactions in 2020.

It remains to be seen how the Central Bank’s decision to keep mortgage rules unchanged and indeed Brexit will affect the Irish market in the long term, but at least now purchasers can plan without being fearful of any sudden shocks.”

  • Click here to download the full report.
03/01/2020