Property prices rise by more than 7% despite lending rules

Yet RPPI figures from CSO suggest slight moderation in level of monthly inflation

Property prices in Dublin and elsewhere continue to rise at a significant rate despite the Central Bank’s lending restrictions.

The latest Residential Property Price Index (RPPI) from the Central Statistics Office shows prices nationally rose by 7.1 per cent in the year to October, moderating slightly from the 7.6 per cent recorded in September.

The monthly increase in prices was, however, softer than in previous months.

In Dublin, where supply shortages are most acute, prices were up 0.7 per cent in October and by 5.5 per cent on an annual basis.


The highest house price growth was in Dublin City, at 7.5 per cent.The lowest growth was in Fingal, with house prices rising just 3.4 per cent.

Residential property prices in the rest of the country, excluding Dublin, were 10.2 per cent higher in the year to October.

The greatest price growth was in the Midlands region, with a 16.6 per cent increase. Conversely, the lowest growth was in the Mid-East region, with house prices up 6.1 per cent.

Demographic pressure

While the Central Bank’s macro-prudential rules, which were recently eased, tempered the market somewhat, demographic pressure combined with supply issues kept prices on an upward curve.

KBC Bank said the monthly easing of inflation led by the Dublin market was at odds with underlying trends in demand and supply.

It said the Government’s Help to Buy scheme and the slight easing in Central Bank’s limits, announced in October, should further boost property purchasing power at a time when new building is still well short of potential demand.

Merrion Capital analyst Alan McQuaid said a lack of supply of houses has pushed up prices, particularly in the Dublin area in the past three years, but it cannot be rectified overnight. “Until this issue is addressed, prices in the capital and its outskirts will likely remain elevated, even with Brexit related risks,” he said.

The Economic and Social Research Institute (ESRI) warned this week that the economy runs the risk of overheating next year as a result of big upturn in residential construction,

The economic think-tank expects up to 18,000 homes to be built next year, the most in nearly a decade.

While this is still below the 30,000 needed to meet demand, it could push the economy close to full capacity, potentially driving up wages and eroding competitiveness.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times