There was further misery for would-be home buyers on Wednesday morning with fresh data released by the Central Statistics Office (CSO) showing that the cost of buying a home has accelerated to its highest level in three years.
The new figures show that house prices jumped by 13 per cent in just 12 months to the end of April, and also point to a price increase of 76 per cent over the last five years.
Despite the price acceleration, economists have played down suggestions that the market is overheating and say that as the Central Bank lending rules kick in, the pace of growth should start to ease.
Prices in Dublin increased by 12.5 per cent in the year to April, with house prices rising by 11.7 per cent and apartments by 15.9 per cent.
The highest house price growth in the capital was in the city centre, at 14.9 per cent. The lowest growth was in south Dublin, where house prices increased by 6.9 per cent.
Residential property prices in the rest of the State were 13.6 per higher in the year to April. House prices outside the capital rose by 12.9 per cent over the period.
The mid-west region showed the greatest price growth, with house prices increasing 18.7 per cent. The Border region showed the weakest price growth, with house prices rising 9.3 per cent.
Rachel McGovern, director of financial services at Brokers Ireland, said the price rises were being fuelled by "massive pent-up demand for homes".
“While those with deep pockets are winning in this high-demand low-availability market, those on average incomes are seriously disadvantaged,” she said.
The Institute of Professional Auctioneers & Valuers' chief executive, Pat Davitt said the dropping in house price inflation in south Dublin – to 6.9 per cent – indicated that increased supply does taper house-price inflation. "This is where most housing stock has been built," he said.
Davy economist David McNamara said lending restrictions on how much prospective home buyers can borrow will start to quell price growth.
“A lack of supply and rising leverage have been the key drivers of house-price inflation to date, but the Central Bank rules will soon begin to bite in greater Dublin – curtailing the pace of inflation,” he said.
Fastest in EU
Irish house prices are still growing at the fastest rate in Europe, with the latest Eurostat release showing Irish house prices rising more than twice as fast as the average increase across the EU, 4.5 per cent in late 2017, while UK figures published on Wednesday show price growth of just 3.9 per cent in the same period.
“In part, this reflects the broader strength of the Irish economy,” said Austin Hughes, economist with KBC Bank.
It also however reflects the fact that Irish residential construction, as a share of overall economic activity, falls well short of the EU average. According to Mr Hughes, the 2017 out-turn at just below 2.5 per cent of GDP was the third lowest in the EU. It should be closer to 4 per cent Mr Hughes added. This means "a serious shortfall in supply".
Still off peak
The CSO said the national index of house prices is 21.1 per cent lower than its highest level in 2007. Dublin residential property prices are 23.3 per cent lower than their February 2007 peak, while prices in the rest of the State are 26.1 per cent lower than their May 2007 peak.
Since early 2013, prices nationally have increased by 76 per cent. Dublin residential property prices have increased 90.1 per cent from their February 2012 low, while prices in the rest of the State are 69.9 per cent higher than in May 2013.