House price data flies in face of speculation
CSO data suggest pick-up in supply has reduced headline inflation to 2% nationally
The latest figures suggest prices in Dún Laoghaire-Rathdown fell by 4 per cent in past 12 months. Photograph: Cyril Byrne
For years we had no reliable data on price trends in the Irish property market, prompting all sorts of speculation, much of it from industry, which had a vested interest in talking up the market. To rectify this, the Central Statistics Office (CSO) in 2011 produced the Residential Property Price Register, now the accepted barometer.
With prices locked down, speculation then shifted to supply, mindful that the official government figures, based as they were on ESB connections, overstated residential construction. The void allowed for more industry-fuelled conjecture, most of it designed to entice inward investment. In stepped the CSO again with its “new dwelling completions” series.
With supply squared off, speculation moved to demand and specifically how much it might exceed supply. To date, the highest estimate we’ve had of our annual housing need is 53,000. With the supply of new homes put at just 18,000 last year, it seems like we’ve a long way to go. One analyst even suggested that the State would need to build 200 homes/apartments in Dublin every week for the next 3,000 weeks – that’s 57 years – to satisfy demand.
How is it then that price growth, the ultimate indicator of the mismatch between supply and demand, has dropped to a six-year low of 2 per cent nationally and to an aenemic 0.1 per cent in Dublin? In May last year, property price inflation in Dublin was running at over 13 per cent. Could it be that supply is beginning to approximate demand?
The latest figures suggest prices in Dún Laoghaire-Rathdown fell by 4 per cent in past 12 months. People might quibble with the use of Dún Laoghaire as a barometer, given it contains some of the city’s most exclusive addresses, but the area is typically seen as a guide to where the market is going. All this is not to say that houses are affordable. Average asking prices in the capital are still more than nine times the average salary. That said, with wages growing at 3-4 per cent, the affordability dial may finally be turning the way of buyers.