Asking price growth in Dublin is slowing, latest data shows
Annual house prices are cooling in Dublin as affordability is becoming an issue at a time when lending is becoming tighter and buyers more stretched, the latest analysis suggests.
Asking prices in the first quarter of 2018 increased in Dublin by 3.3%, less than the 4.8% recorded in the rest of Ireland, according to the property report from MyHome and Davy.
Nationally, asking prices have increased by 9.5% year on year while in Dublin annual price inflation is 8.2% and excluding Dublin it is 10%, the data also shows.
‘Affordability is beginning to bite in Dublin, but outside the capital house price inflation is continuing to rise and now stands at 10% year on year,’ the report says. However, the number of home sales for €1 million plus increased by 25% in 2017, suggesting that the upper end of the market is still strong.
The median asking price for new sales nationally is €260,000 and €345,000 in Dublin while excluding Dublin it is €210,000.
The author of the report, Conall MacCoille, chief economist at Davy, said that while house price inflation would remain close to 10% outside Dublin for 2018, stretched affordability in the capital and a pickup in housing supply suggested the rate of inflation would continue to moderate.
‘The tightening of the Central Bank mortgage lending rules coupled with stretched affordability was always likely to be first felt in Dublin. The house price to income ratio for first time buyers in Dublin was 4:1 at the end of 2017 and this compares with 3.5:1 recorded in Cork, Galway, Limerick and Waterford,’ he pointed out.
He also pointed out that price inflation in Dublin is now 8.2%, down from just over 11% in the fourth quarter of 2017 and the cooling off is already evident in more expensive areas and property types.
The median asking price in Dublin South City was flat year on year at €275,000 but was up 12.8% in Dublin North City to €225,000. The median price of a one bedroom apartment in Dublin increased by 13% over the past 12 months to €190,000 but in contrast four bedroom detached house prices have been flat at €650,000.
The other key trend identified by the report is an increase in supply and while the number of properties listed nationally on MyHome is largely unchanged at 18,800, the number of properties in Dublin is 3,900, up 20% on last year.
Furthermore, the number of new developments on MyHome has increased by 24%. While two thirds of these developments are in the greater Dublin area there has also been a sharp increase in some other areas such as Cork with supply up 68% on the middle of 2017.
‘Although moving in the right direction the current level of home building, circa 12,000 per annum, remains well short of the natural demographic demand of at least 35,000 each year,’ MacCoille added.
According to Angela Keegan, MyHome managing director, while first time buyers would continue to be concerned at the rate of inflation, there were some positive trends in the new figures.
She explained that sales levels are up 10% in the first two months of the year. ‘At this stage we would be predicting an 11% increase on last year’s figure of 54,000. Given that the level of transactions was 18,400 in 2011 it is encouraging to see that we should be in or around the 60,000 mark this year,’ she said.
She added that activity at the very top end of the market shows little sign of slowing down. An analysis of the Property Price Register shows that the number of house sales above €1 million was up 25% on the previous year.