Asking prices for property up for first time since 2006

The average asking price of homes in Dublin went up by 4.5 per cent in the second quarter of the year, the highest jump since the height of the property bubble in 2006, according to figures published by property website myhome.ie this morning.

The website, which is owned by The Irish Times, describes the increase as "a further sign that the recovery in the property market is gaining momentum" and said price growth had extended to the national market.

The 4.5 per cent increase in asking prices in the capital is for the fifth consecutive quarter where increases have been recorded. The average asking price in the capital in the second three months of the year was €255,000, up €11,000 on the first quarter.

Average national price

The national average asking price grew by 1.3 per cent for the same period – the first such increase since the peak of the market in the last quarter of 2006. The average asking price nationally stands at €190,000.

The author of the report, Caroline Kelleher from DKM Economic Consultants, said that while the recovery in national prices was encouraging, the stronger price growth in Dublin means the divergence between the capital and country is continuing to widen.

“Focusing on new sale instructions to the Dublin market, we see that the median asking price has increased 7.4 per cent in Q2. This clearly reflects rising expectations among sellers in the current market,” she said.

Dublin acceleration

An analysis of properties in which the sale was successfully completed in the first three months of the year shows a rate of increase in Dublin of 20 per cent, with the national rate of increase put at 13.6 per cent.

“Supply constraints are clearly a key factor in Dublin and other key markets, and these would appear to be driving the current price increases,” Ms Kelleher said. “Given the time lag in addressing supply issues, it is likely prices will continue to rise in these areas for some time to come.”

Managing director of myhome.ie Angela Keegan said the widening gap between the country and the capital, and the volatile supply issue, needed to be addressed.

“It’s heartening to see asking prices nationally rise for the first time in eight years. While this is an important landmark on the road to recovery, we are still much closer to the start of that journey then the finish. The average, mix-adjusted asking price in Dublin is now 34 per cent higher than the national figure. This is on a par with trends seen at the height of the boom when the difference stood at 35 per cent, albeit prices are at a much lower base.”

She said the stock situation in the city improved by 20 per cent in the second quarter but suggested this was “due to seasonality more than anything else”. Given the projected low number of new builds, “It is clear affordability in Dublin is set to deteriorate further in 2014. Addressing supply issues where they exist will be key if we are to return to a normal functioning property market.”