Optimism over rise in Dublin house prices

The Dublin property market has "turned a corner", but prices outside the capital have not yet bottomed out and the divergence is widening, according to the latest Property Barometer from website MyHome.ie. The study finds that there is now a 28 per cent difference between asking prices in Dublin and prices across the Republic as a whole: a year ago the difference was 17 per cent.

MyHome.ie’s latest figures show that the annul mix-adjusted asking price (an average measure that takes account of housing with different characteristics) in Dublin rose by 2.4 per cent to €241,392 last year, while nationally, they declined by 5.9 per cent to €189,086.

Caroline Kelleher from DKM Economic Consultants, which compiled the Barometer, said Dublin prices had been rising from about March last year, due largely to short supply. She expects the divergence between Dublin and the rest of the State to increase further in 2014.

MyHome.ie, which is owned by The Irish Times, noted that while national asking prices continue to decline, the 0.9 per cent fall in the final three months of 2013 was the slowest in six years. The website has seen particular signs of price stabilisation in Cork, where the median asking price (the so-called “middle” price, where half of properties are less expensive) was unchanged at €195,000 for all of 2013.

For Dublin, the median asking price was €249,500 at the end of the year, down €500 on the third quarter, but a quarterly increase of 8.9 per cent was recorded in Dublin South City. Dublin North was the weakest part of the county, with a 1.7 per cent decline.

Median prices also declined over the quarter in Limerick (4.5 per cent), Galway (2.9 per cent) and Waterford (9.1 per cent).

A further breakdown of the data shows that median asking prices for four-bed, semi-detached houses rose in a number of counties in the last quarter of 2013, but fell by 1.3 per cent in Dublin. MyHome.ie described the decline as “small” and noted that it was the first quarterly drop since early 2012.

MyHome.ie managing director Angela Keegan highlighted a “weak supply situation” in key parts of urban centres, which she expects to continue this year. She pointed out that there are about 3,000 properties on sale in Dublin at the moment, which is down 30 per cent on 12 months ago.

“ We are also seeing very low volumes of housebuilding and planning permission being granted for apartments, when there is a clear demand for family homes,” said Ms Keegan.

She believes the average price increases seen in Dublin are “unsustainable over the medium term” and called on the Government and local authorities to “take action”.

“The weak supply of new housing stock, particularly in Dublin, will be one of the main challenges facing the property market in 2014,” Ms Keegan said..

The most recently-available figures on sale prices from the Central Statistics Office showed an average national increase of 5.6 per cent in residential property values in the year to November. These figures are based on purchases backed by mortgages, with MyHome.ie estimating that half of such deals are based purely on cash.