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Irish Residential Property Prices Increased In March

Written by Robert McHugh, on 28th Apr 2015. Posted in Ireland

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The latest Residential Property Price Index (RPPI) release from the CSO shows that in the year to March, residential property prices (houses and apartments combined) at a national level rose by 16.8%, the twenty-second annual increase in a row and up from the year-on-year rise of 14.9% posted in February. 

This is estimated to be largest annual increase since the height of the property boom in the “Celtic Tiger” era.

Dublin house prices were up 1.0% in the month and were 22.1% higher in the year in March, with prices now up on an annual basis for twenty-seven months running. The annual increase was higher than the rises of 21.1% and 21.7% posted in February and January respectively. The price of residential properties in the rest of Ireland (i.e. excluding Dublin) was up 0.7% in the month, and 10.7% higher on annual basis. Dublin house prices are now 36.9% lower than at their highest level in early 2007 while residential property prices for the whole of Ireland remain 38.2% off their peak of eight years ago.

Merrion Stockbrokers indicate that a lack of supply of houses has clearly pushed up prices, particularly in the Dublin area in the past couple of years, but it is not something that can be rectified overnight. They believe that the most recent planning permissions data showed a sharp rise in the second half of 2014, indicating that things may be starting to improve on this front, which should help to reduce the increase in house prices over time.

According to Merrion, "The generally improving economic backdrop should sustain the house price recovery in the short-term even with credit restrictions. And it should be remembered that the Central Statistics Office (CSO) figures are based on mortgage draw-downs only, and don’t take into account cash transactions. So the underlying health of the market and the rise in house prices is stronger than the official data would suggest. Using the CSO numbers, there was an average increase of 12.9% in house prices in 2014, up from 1.8% in 2013. Taking all the factors into consideration, an increase of just under 12% is now projected for 2015."

Director of Research at Savills, Dr. John McCartney today claimed that ‘Approvals Hoarding’ is driving the faster house price growth. He believes that today's figures may reflect a delayed market reaction to the Central Bank’s new mortgage lending rules.

McCartney said, "Last October the Bank announced plans to make mortgage lending more restrictive.  However it said that people with loan offers in place prior to the regulations becoming law would still be able to borrow under the old rules.

This led to a stampede for loan approvals in the closing months of last year.  With these offers generally lasting for six months, time is running out for buyers with pre-existing approvals to borrow under the old regime. It may be that demand from these motivated buyers is behind the rebound in price growth seen in today’s figures.”

For more visit: www.businessworld.ie

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