Dublin house price increases are likely to lag those in the rest of the country in 2016 due to "affordability constraints", according to the latest report by MyHome.ie and stockbroking firm Davy.
The property website report found “renewed price momentum” in the first three months of the year, with asking prices for newly listed properties rising 2.1 per cent nationally and by 0.9 per cent in Dublin.
However, MyHome.ie, which is owned by The Irish Times Limited, and Davy warned of low housing stocks and a future marked by “depressed” levels of homebuilding activity, with construction targets set by the last government likely to be missed.
The upward nudge in prices in the first quarter of 2016 follows a spell of decline towards the end of last year. In Dublin, prices declined marginally in both the third and fourth quarter of 2015.
The national mix-adjusted asking price for properties is now €208,000, while in Dublin, the corresponding figure is €290,000.
The report predicts Irish house price inflation will register another “solid gain” of close to 5 per cent in 2016, with Dublin lagging and “more room for catch-up” outside the capital.
The housing market is likely to be tighter this year than it was in 2015 in part because sellers in Dublin last year brought forward properties to the market in anticipation of a slowdown in price inflation.
This will not be repeated in 2016, according to the author of the report, Davy Research chief economist Conall Mac Coille, while housing construction also remains "very weak".
Mr Mac Coille noted that the stock of properties listed for sale fell to a fresh low of 21,650 in the first quarter, down 6 per cent year-on-year. The number of properties sold rose to a new high of 6,610, but this increase was driven by a further shortening of the average time to reach “sale agreed”.
Dublin housing supply will pick up less sharply through the summer months than it did in 2015, he warned.
“This is because the ambitious goals set under the last government’s Construction 2020 strategy are unlikely to be attained with no stable coalition yet formed for the new Dáil,” Mr Mac Coille said. Overall, homebuilding levels “look set to remain depressed for some time”, he added.
The report found that Dublin and the commuter belt counties last year accounted for 75 per cent of transactions that exceeded €220,000, the threshold below which first-time buyers can pay a 10 per cent deposit, the minimum possible under the new Central Bank rules.
“The Central Bank mortgage lending rules have prevented households from reacting to the lack of housing supply by taking on ever more highly leveraged loans and bidding up house prices further. However, our analysis shows this has been mainly a Dublin and commuter belt phenomenon,” Mr Mac Coille said.
Market rebound
Angela Keegan, managing director of MyHome.ie, said it was "very encouraging" to see the rest of the country leading a property market rebound, while in the case of three-bedroom semi-detached houses, it was "very heartening" that Wicklow was the only county to record a price decrease in the first quarter.
However, the low level of transactions in the market remains a major issue, she said.
Residential property transactions grew by almost 15 per cent in value terms to €10.7 billion in 2015, up from €9.3 billion in 2014 and €6 billion in 2013, according to the report’s analysis of the Property Price Register.
“The challenge for the market will be to maintain this momentum in a market where stock is reduced and where the level of new homebuilding is at a very low level,” Ms Keegan said.
