Price of Dublin new homes rising at six times rate of existing homes

The average price of a new home in Dublin has risen by nearly 60 per cent in the last six years, while the cost of an existing or second-hand home has increased by just 11 per cent.

The disparity, revealed in figures from the Central Statistics Office (CSO), suggests the current high rate of property price inflation – now running at close to 12 per cent in Dublin – is being fuelled, in part, by the new-home sector, which accounts for about 15 per cent of transactions.

The CSO figures show that, between 2010 and 2016, the average cost of a new home in Dublin increased from €282,289 to €450,274.

Of the four city authorities, Dún Laoghaire-Rathdown recorded the sharpest rate of increase with average prices more than doubling from €301,186 to €618,026.

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In Dublin city, average prices jumped 70 per cent from €246,572 to €419,472 during the six-year period while in the other two local authorities, South Dublin and Fingal, the average cost of new home rose by 41 per cent and 34 per cent respectively.

During the same period, the average price of an existing home in Dublin rose by 11 per cent from €351,612 to €389,879 .

While Dublin City recorded the biggest jump of nearly 15 per cent, average prices in Fingal actually fell by 1 per cent during the period.

The figures reveal that in 2010 the average price of a new home was 25 per cent cheaper than an existing house but by 2016 the average cost of a new home was 15 per cent more expensive.

Experts linked the sharp turnaround in the price of new homes since 2010 to the fact that most units coming on stream are bigger; built to higher specifications; located in more established areas; and aimed at groups with higher incomes.

"The CSO figures illustrate the hill that prospective new-home purchasers are faced with in Dublin," architect and property expert Mel Reynolds said.

“New homes became unaffordable in Dublin in 2012, and the situation has since deteriorated further,” he said.

Currently only the top 20 per cent of earners can afford to purchase even the cheapest second-hand home in Dublin even with a 10 per cent deposit saved, Mr Reynolds said.

“The CSO data highlight the policy blind spot of having no affordable housing scheme in Dublin, a big disappointment in the recent budget,” he added.

Help-to-buy scheme

Mr Reynolds said it was difficult to pinpoint what effect of Government initiatives such as reduced apartment standards or the help-to-buy scheme for first-time buyers have had on the upward trajectory of new home prices since 2012.

“A ‘flattening out’ of new-home prices since 2015 could be attributed to the Central Bank’s macroprudential rules introduced in February 2015.

“However, given that the majority of new builds are not aimed at first-time buyers and the prominence of cash purchasers, the effectiveness of this measure in mitigating price rises may be reducing,” he added.

The latest figures from the CSO show that residential property prices at a national level increased by 12.2 per cent in the year to August and by 11.9 per cent in Dublin.

The CSO figures revealed that the highest house-price growth was in Dublin City, at 13.4 per cent, while the lowest growth was in Fingal, with house prices there rising by 9 per cent.

Residential property prices outside of Dublin were 12.6 per cent higher in the year to August.