Property price inflation accelerates to 8.6%

Government scheme and loosening of Central Bank rules appear to be stoking demand

The latest Residential Property Price Index (RPPI) shows prices in Dublin were up 1 per cent in November and by 5.9 per cent on an annual basis. Photograph: Frank Miller

The latest Residential Property Price Index (RPPI) shows prices in Dublin were up 1 per cent in November and by 5.9 per cent on an annual basis. Photograph: Frank Miller

 

Property price inflation has risen to 8.6 per cent following the introduction of the Government’s help-to-buy scheme and a loosening of the Central Bank’s lending rules.

The latest Residential Property Price Index (RPPI) shows prices nationally rose by 1.5 per cent in November.

In Dublin, where supply shortages are most acute, prices were up 1 per cent in November and by 5.9 per cent on an annual basis.

The highest price growth was in south Dublin, which recorded an 8.3 per cent hike in the 12 months to November. In contrast, the lowest growth was in Fingal, with prices up 3.1 per cent.

Prices in the rest of the country, excluding Dublin, were 12. 8 per cent higher in the year to November.

The strongest growth was in the West region with prices increasing 16.7 per cent.

Conversely, the Mid-East region had the weakest price growth, with house prices up 8.3 per cent.

Not learning lessons from boom

Overall, the national index is still 31.5 per cent lower than its highest level in 2007. Dublin residential property prices are 32.2 per cent lower than their February 2007 peak, while residential property prices in the rest of Ireland are 35.9 per cent lower than their May 2007 peak.

“A lack of supply of houses has clearly pushed up prices, particularly in the Dublin area in the past few years, but it is not something that can be rectified overnight,” Merrion analyst Alan McQuaid said.

“ Until this issue is addressed, prices in the capital and its outskirts will likely remain elevated, even with Brexit-related risks,” he said.

Mr McQuaid suggested the easing of mortgage lending restrictions by the Central Bank combined with the tax-incentive scheme for first-time buyers announced in October’s budget would also maintain the upward pressure on prices.

“ The real question is whether we need this type of incentive at all, with politicians seemingly not learning their lesson from the property crash/financial crisis,” he said.