The trend of downward house price inflation which was noticeable in the second half of 2018 has continued in the first quarter of 2019, 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 is now just 3.3% nationally and 1.1% in Dublin – down from 6% and 3% respectively in fourth quarter of 2018.
Despite the downward trend in the annual rate, prices are continuing to rise, albeit at a slower rate. The report found that asking prices for newly listed properties nationally increased by 2% in the first quarter while they rose by 1.4% in Dublin.
This means the median asking price for new sales nationally is €271K up €5K from the last quarter while the price in Dublin is €380K, also up €5K. Newly listed properties are seen as the most reliable indicator of future price movements.
The author of the report, Conall MacCoille, Chief Economist at Davy, said the slowdown in price inflation, which was concentrated in Dublin, was largely due to the Central Bank’s lending rules and unrealistic price expectations rather than uncertainties caused by Brexit.
At the beginning of 2018, the median loan-to-income (LTI) ratio among first-time buyers in the capital was already 3.5 times income and therefore close to the regulatory threshold. The tightening of the Central Bank of Ireland mortgage lending rules could have affected the resulting slowdown in price inflation. MyHome say this was always going to be felt first in the capital and it also appears that price expectations in early 2018 were unrealistic and a period of adjustment has taken place as a result.
Commenting on the report, The author of the report, Chief Economist at Davy, Conall MacCoille said, "Interestingly our analysis shows that the slowdown has been concentrated in the most expensive property types and areas. For example, the median asking price for four-bedroom detached houses in Dublin is flat on the year at €650K. However, prices for one-bedroom apartments are up 10.5% on the year to €210K while the price of two-bedroom apartments are up over 8% across Dublin. Despite the current slowdown, we still expect Irish house prices nationally to rise by 4% in 2019."
He added, "Whatever about the possibility that Brexit uncertainties have held back prices, there are few signs yet that Brexit is holding back transactional activity. Residential transactions grew by 4% in 2018 to 57,000 and we believe volumes in January and February were also up 4% on the same period last year."