Residential property prices up 9.5% on an annual basis

Prices still 35.4 per cent off their peak in 2007 despite recent increases

House prices in the capital rose by 3 per cent in August while apartment prices were up 0.3 per cen

House prices in the capital rose by 3 per cent in August while apartment prices were up 0.3 per cen

 

Residential property prices rose by 2.3 per cent from July to August and were up 9.5 per cent on an annual basis, according to new figures published by the Central Statistics Office (CSO).

The monthly increase was similar to that recorded for the same month a year ago and was the largest rise since last October.

In Dublin, residential property prices increased by 2.8 per cent last month and were 8.2 per cent higher than in August 2014.

House prices in the capital rose for the 32nd month in succession, rising by 3 per cent from July to August. Apartment prices were up 0.3 per cent.

Outside of Dublin, property prices were up 1.9 per cent last month, but were 10.8 per cent higher compared to August 2014.

Nationally, residential property prices are still 35.4 per cent lower than their peak level in 2007.

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Dublin house prices are 34.4 per cent lower than their peak while apartment prices are 40.4 per cent lower. Combined property prices for the capital are 36.2 per cent lower than their highest level.

Outside of Dublin, residential property prices remain 38.7 per cent lower than in 2007.

Merrion Capital chief economist Alan McQuaid said it was hard to know whether the rise in August was due to seasonal factors or to renewed strength in the housing market on the back of a booming economy.

“One has to assume that the tighter lending restrictions imposed by the Central Bank and the end of the CGT property purchase incentive scheme as announced in last October’s Budget will weigh negatively and bring prices down to more affordable levels,” he said.

“The pick-up in planning permissions, albeit from historically low levels, should also dampen house prices. Lower prices will be welcomed by IDA Ireland. The agency has had some difficulty in attracting new foreign direct investment into the country because of soaring commercial and residential property values,” Mr McQuaid added.

Merrion expects house prices to remain higher on a year-on-year basis for a while yet even with credit restrictions and increased planning permissions.

“There was an average increase of 12.9 per cent in house prices in 2014, up from 1.8 per cent in 2013. Taking all factors into consideration, we are now looking for an average increase of around 11 per cent for 2015,” said Mr McQuaid.

Davy economist Conall Mac Coille said the rise in prices in August was surprising.

“August’s figures mean that annual Residential Property Price Index (RPPI) inflation was 9.5 per cent in August, split between a 10.8 per cent rise outside Dublin and an 8.2 per cent gain in the capital,” he said.

“Overall, today’s exceptionally strong release could reflect volatility but points to upside risks to our forecast for RPPI inflation to slow to 5 per cent by December,” he added.