Property prices nationally up 15 per cent in 12 months

Property prices nationally rose by 2.3 per cent last month and are now nearly 15 per cent higher than a year ago.

The latest official figures show price rises in Dublin, however, are still outstripping those in the rest of the country by a considerable margin.

The Residential Property Price Index, compiled by the Central Statistic Office (CSO), indicates residential prices in the capital rose by 3.5 per cent in August, and were over 25 per cent higher than a year ago.

Prices outside Dublin, meanwhile, rose by 0.8 per cent during the month and were 5.6 per cent higher on an annual basis.

A breakdown of figures show Dublin house prices rose by 3.5 per cent during the month and were 24.7 per cent higher compared with a year earlier, while apartment prices in the capital were 32.6 per cent higher on an annual basis.

The CSO cautioned, however, that its data for apartments were based on low volume of trades and were subject to a high degree of volatility.

Despite the recent surge in prices, house prices in Dublin remain on average 39.2 per cent lower than their 2007 peak, while apartments are still 45.8 per cent lower than their boom-time high.

The CSO said the price of residential properties in the rest of the country remained 44.6 per cent lower than their highest level in 2007.

Minister for Housing Paudie Coffey acknowledged that lack of supply was leading to an increase in prices “due to pent up demand”.

However, he said the construction sector was beginning to show signs of improvement, noting there had been an increase in housing commencements and a jump of over 30 per cent in completions for the first half of 2014.

“Government will continue to support sustainable developments where there is demand in order to address the current housing situation that is most acute in the Dublin area,” he said.

However, Property Industry Ireland, the organisation representing businesses working in the property sector, warned that today’s house price increases in Dublin are having an impact on driving up rents and putting pressure on social housing.

Director Peter Stafford said: “While today’s continued house-price growth will help some people out of negative equity, this continued price growth, coupled with an increased number of transactions, will undoubtedly lead to further pressure on rents and increased demand for social housing, where there is already a huge shortage.”

“The three sectors of the property market are inter-connected, and it is not surprising that we are seeing increased homelessness and shortages of local authority housing at the same time as price increases,” he added.

Alan McQuaid of Merrion Stockbrokers said: “The underlying housing market is a lot more robust than the official data would suggest as the CSO figures are based on mortgage draw-downs and don’t include cash transactions .”

“Although cash sales are not as high now compared with the start of the year, they are still significant, with three to four of every ten transactions a cash purchase.”

He said a lack of supply of houses was clearly pushing up prices, particularly in the Dublin area, something which the Government hopes to address, but it is not something than can be rectified overnight.

“Clearly, there is an element of housing froth at the moment which is pricing many first-time buyers out of the market,” Mr McQuaid.