First it was rents, now house prices are rising at fastest rate since the boom
Figures for first quarter show property prices are rising at fastest rate since 2007 - but still remain way off boom time highs
First it was rents which started to track boom time growth rates, before eventually surpassing Celtic Tiger highs in the first quarter of this year. Now house prices are edging closer to a similar trajectory, with figures showing that gains in the first quarter of the year were the fastest since 2007.
According to figures compiled by Davy Stockbrokers and based on the residential property price index, property prices rose by 0.9 per cent in the first three months of the year - the strongest first-quarter gain since 2007. Normally the index is subdued or falls back in the quiet first quarter; the index fell for example, by 0.4 per cent in the same period in 2016 and by 1.4 per cent in the first quarter of 2015.
This year however, house prices showed no drop in momentum.
“So the unseasonably sharp price rises in early 2017 are consistent with our view that Irish house price inflation will accelerate to 10 per cent this year,” economist Conall MacCoille says, adding that both the introduction of the Help to Buy scheme and the loosening of Central Bank mortgage lendings rules have added impetus to house price expectations.
A caveat to note
However, while house price growth is picking up speed, it remains some way off the heady heights achieved in the Celtic Tiger years. Back in the first quarter of 2007, house prices grew by 1.7 per cent for example, while the highest first quarter growth was reported in 2006, when prices grew by 1.8 per cent.
Moreover, national house prices are still 31.5 per cent lower than their highest level in 2007, while Dublin residential property prices are 31.5 per cent behind their February 2007 peak.
Nonetheless, the fast pace of growth will offer little comfort to house buyers, who are struggling to translate their mortgage approval into a mortgage drawdown. And as prices rise, so too does the amount people need to save for a down payment.
Last week it was disclosed that new schemes in Silicon Docks and Clonskeagh sold out shortly after being launched on the market, with lack of supply still a significant issue behind rising prices.
On Friday, the International Monetary Fund warned that the help to buy scheme is likely to lead to an increase in demand in the property sector, as it called for close monitoring of house prices.