Growth in house prices slowed to 3.7% nationally in first nine months of year

Tighter lending rules and an increase in the number of new homes slowed the rate at which house prices rose in the nine months to the end of September , latest figures show.

The average price of a second hand home rose 3.7 per cent in the first nine months of the year against 6.8 per cent during the same period in 2017, according to estate agents Sherry FitzGerald.

Prices in Dublin grew 3.6 per cent in the year to date, around half the 7.3 per cent increase in house prices recorded during the same period in 2017.

Nationally, house prices rose 0.5 per cent in the three months ended September 30th and by 0.3 per cent in Dublin, Sherry FitzGerald said.

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Marian Finnegan, the firm's chief economist, said the figures showed a notable slowdown in the pace of house-price growth, particularly in Dublin.

“A more limited mortgage market due to tighter lending policy introduced towards the end of 2017 and an improved offering in the new homes market have collectively resulted in the slowdown in the pace of inflation,” she said.

Earlier this year the Central Bank tightened mortgage-lending rules so that most people buying a second or subsequent house could not borrow more than 3½ times their income, limiting the cash they can raise to purchase property.

Sherry FitzGerald pointed out that the number of new homes sold in the Republic in the first half of this year grew 31 per cent, while the amount in Dublin was up 43 per cent.

While the value of new homes sold this year grew 9 per cent nationally it rose by 3 per cent in the capital.

‘Starter homes’

The estate agent argued that the stability in new house price inflation indicated an increase in the number of “starter homes” on the market.

“Furthermore, excluding new homes reveals growth of only 1 per cent in second hand sales year-on-year, and notably a 1 per cent contraction in second hand sales in Dublin the same period,” Sherry FitzGerald.

The State’s Property Price Register shows that about 24,600 homes were sold for a total of €7.2 billion during the first half of the year.

On an annual basis, the number of sale rose 5 per cent nationally and 7 per cent in Dublin.

Comparing those figures with mortgage statistics shows that 41 per cent of dwellings were probably bought for cash, that is without the aid of a home loan during the first half of the year. The comparable figure for the same period in 2017 was 43 per cent.