House prices grew at an annual rate of 1.8 per cent in January, up from 0.5 per cent the previous month.
The pick-up in price growth, the first for several months, was linked to the easing of Brexit fears and “strong income gains”, both of which supported an increase in new home sales.
In Dublin, prices, which had been falling, bounced back into positive territory, rising by 0.5 per cent year on year.
The renewed strength of the market is, however, expected to be short-lived with the coronavirus outbreak and subsequent containment measures forecast to exert a downward pressure on prices and sales.
The latest Residential Property Price Index shows the typical cost or median price paid for a home in the Republic was €260,000.
The figures show the median price of a home in Dublin was €370,000. Within the Dublin region, Dún Laoghaire-Rathdown had the highest median price (€525,000), while south Dublin had the lowest (€345,000).
The highest median prices outside Dublin were in Wicklow at €327,500 and Kildare at €309,999, while the lowest price was €104,000 in Leitrim.
The Central Statistics Office (CSO) also published residential property transaction data for January revealing a strong start to the year for new home sales, which rose by 54 per cent in year-on-year terms. Residential purchases of all types rose by 24 per cent.
“Our judgment is that the degree of improvement in January may be primarily a reflection of an easing in Brexit-related uncertainty,” KBC Bank Ireland chief economist Austin Hughes said, while noting an even larger bounce in property price inflation has been seen in the UK of late.
“It is also likely that strong trends in incomes and employment in the Irish economy in the latter stages of last year also contributed particularly as 2019 was the first year since 2012 when Irish residential property prices increased less (2.4 per cent) than average weekly earnings (3.6 per cent),” he said.
Goodbody analyst Alexander Wilson said while the January data was strong, “it can be considered old news” soon to be overtaken by the coronavirus, which will pose significant headwinds for the housing market.
Rachel McGovern from Brokers’ Ireland noted that of the 21,000 new homes constructed last year just 8,000 were available for sale. “Institutional investors are snapping up the lion’s share of the new builds particularly in the most populous Dublin region,” she said. “The nation holds its breath for bold and imaginative solutions to the delivery of more homes and at affordable prices by the new government when it takes shape,” she added.
Property prices nationally have increased by 84.7 per cent from their trough in early 2013. Dublin residential property prices have risen 94.7 per cent from their February 2012 low, while residential property prices in the rest of the State are 82.7 per cent higher than in May 2013.