Dublin’s property price growth ‘anaemic’ compared with global trends

Knight Frank’s city index shows Irish capital lags far behind other cities around the world

Price growth may be worrying in the capital, but it is far slower than global hotspots such as Canada’s Halifax. Photograph: Alan Betson

Price growth may be worrying in the capital, but it is far slower than global hotspots such as Canada’s Halifax. Photograph: Alan Betson

 

Dublin’s property price growth is “almost anaemic” compared with global trends, according to the Knight Frank agency, whose global residential cities index tracks price growth in 150 cities in 55 countries.

The price rises in the cities that top its chart are eye-watering. Halifax, in Canada, has the highest price growth in the year to the end of June 2021 – to the tune of 30.8 per cent. Izmir, in Turkey, and Seoul, in South Korea, both saw 30 per cent increases. Prices in Phoenix, in the American state of Arizona, at number four, rose by 29.3 per cent while those in Moscow, the Russian capital, in fifth place, rose by 28.8 per cent.

Listed in 82nd position, Dublin is the only Irish city in the index, with annual price growth of 6.5 per cent. This differs from the 8.1 per cent increase cited by the Central Statistics Office, as this report covers homes that cost at least €750,000, according to Joan Henry, chief economist and head of research at Knight Frank Ireland, who says the Covid pandemic has caused a huge flow of wealth into housing.

Countries with overheated housing markets are taking action to cool price inflation. Canada’s prime minister, Justin Trudeau, promised before his recent re-election to introduce a two-year countrywide ban on foreign buyers

While growth of almost 7 per cent is substantial, it means Dublin is lagging behind global trends. Kate Everett-Allen, partner and head of international residential research at Knight Frank, describes the city’s 6.5 per cent increase as “almost anaemic” compared to Halifax’s 30.8 per cent rise.

Fifty-seven of the tracked cities saw prices rise by 10 per cent or more. Two years ago six cities in mainland China fell into this bracket. Now only Guangzhou, at 11.4 per cent, is in this group. The report tracks 15 cities in the US and in mainland China. Prices in the former jumped by 19.6 per cent, compared to a 5.6 per cent rise in the latter.

Can this rate of growth continue? According to Everett-Allen, countries with overheated housing markets are taking action to cool price inflation; she cites Canada’s prime minister, Justin Trudeau, who, before his recent re-election, promised to introduce a two-year countrywide ban on foreign buyers.

It is one of a number of measures seen around the world to take the heat out of housing. “Since 2018 New Zealand has had a ban on foreign purchasers buying existing properties – they could still purchase new builds. Seoul, the capital of South Korea, has had about 20 rounds of cooling measures over the last two to three years,” she says.

In addition, she expects demand will start to wane as pandemic-amassed savings diminish, and as monetary policy tightens, pointing to the example of Norway, the first G10 economy to raise interest rates, with New Zealand, the US and the UK likely to follow in the short to medium term.