Irish House Price Report Q1 2017 | Daft.ie

The figures from the latest Daft.ie House Price Report show a strengthening of house price inflation across the country. The year-on-year change in the average list price nationally was 9.4% in the first quarter of 2017, the highest it has been since the second quarter of 2015

Then, inflation was on the way down - from a high of over 15% - as the impact of the Central Bank mortgage rules was kicking in. But after reaching just 6.1% in early 2016, inflation has risen again. That upward pressure is entirely down to Dublin. The inflation rate outside the capital is more or less the same now (9.9%) as a year ago (9.8%).

House Price Lowest Point

But in the capital, house price inflation has increased from 1.2% in early 2016 to 8.7% in early 2017. Of Dublin's 25 markets - the 22 postal districts, plus North, West and South County Dublin - a year ago, none of them had prices increasing by 10% or more. Indeed five areas, including some of most expensive, had falling prices in early 2016.

Now, however, none of the 25 markets in Dublin is experiencing falling prices, i.e. increased affordability. And nine of the markets are seeing double-digit increases. In a number of parts of the city - including Dublin 1, Dublin 7 and Dublin 10 - prices are now up over 70% from their lowest point. Across the city as a whole, prices increased by an average of €17,500 in the first three months of 2017 alone and have risen by almost €120,000 in the last five years.

But the problem is not just limited to Dublin. In the four other major cities, and across Leinster outside Dublin, the average increase in prices in the first three months of 2017 was €10,000. These regions too have seen the prices rise by 50% or more on average in the last few years.

The problem is least acute in Munster, Connacht and Ulster outside the cities. In these parts of the country, which make up about 37% of households, prices have risen by 30% since the start of 2014. But, with the exception of the final three months of 2014, 2015 and 2016 - when the market goes into hibernation - prices have risen in each quarter since the start of 2014

Most and least expensive areas

It does look, though, for the moment that in the non-city parts of Munster, Connacht and Ulster, house price inflation has peaked. The graph accompanying this commentary shows the year-on-year increase in house prices, by region, since the start of 2013, when the Dublin market bottomed out. It shows successive waves of house price inflation. The first, in Dublin, peaked in mid-2014 at 25%, but cooling dramatically once Central Bank rules were brought in in early 2015. The second is in the rest of Leinster, at over 20% in early 2015, as those priced out of the Dublin market moved further out.

The third wave can be seen in the "Other Cities" category - which includes Cork, Galway, Limerick and Waterford. Inflation in this market peaked in late 2015, again at over 20%. In these locations, the Central Bank rules meant in effect only a loan-to-value restriction and not a loan-to-income restriction, as prices were (and remain) significantly lower, even though incomes do not vary nearly as much.

The final two regions shown - Munster and Connacht-Ulster - have far less dramatic peaks in inflation, 14% in late 2015 in Munster and 12% in mid-2016 in Connacht-Ulster. Not only were these peaks less dramatic than the 20%-plus seen elsewhere, in both these regions, inflation appears to be subsiding: it is 7% in Munster and 9% in Connacht-Ulster.

Most and least expensive areas

However, elsewhere in the country, house price inflation has re-emerged as a problem in the first few months of 2017. This is consistent with the obvious consequence of the significant stimulus to demand given in late 2016. Both the change in mortgage rules for first-time buyers and the "Help-to-Buy" scheme make it easier for first-time buyers - by far the largest chunk of the market - to bid higher prices.

It is unfortunate that the primary focus of policy efforts late last year, when it came to the housing market, was to further stimulate demand and prices, rather than supply and quantities. Adding up the four components of demand - obsolescence, falling household size, natural increase and net migration - it is clear that the country needs at least 40,000 and in reality probably 50,000 homes per year. But in recent years, the number of new homes built has been at most one quarter of that.

Given that huge shortfall - one that has been evident now in the housing market since 2011 - it is incumbent on policymakers to focus their efforts on increasing housing supply where it is needed. And given the evidence from this report and other sources, that demand is concentrated in and around Ireland's cities.

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Discuss This Article

  • Re: Irish House Price Report Q1 2017

    Posted By: 2Pack Date: Monday April 3, 2017 @09:31PM

    Good Man Ronan you sensible economist you!

    2Pack

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  • Re: Irish House Price Report Q1 2017

    Posted By: Anonymous Poster Date: Tuesday April 4, 2017 @01:07PM

    How can you say an average house price in Wicklow is 295k, are you just basing this on Greystones!!!.
    Try an area like Rathdrum, houses bought there in 2007 for 380k for a 3 bed semi and you would struggle to get 215k for it today eventhough it is serviced by a train & not far from the N11, so tell me how you came up with 295k & what is rest of Co. Wicklow doing wrong???.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Anonymous Poster Date: Tuesday April 4, 2017 @03:21PM

    I totally agree with you, houses in my area were sold for 317.000 in 2007, this year the asking price is 170.000, so where is the dramatic price increase they are writing about. The house is minutes from M1 and Dublin Airport.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Simon Date: Tuesday April 4, 2017 @05:57PM

    In the time you asked the questions about the figures, the prices have gone up by another thousand euros. What are ye waiting for?

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  • Re: Irish House Price Report Q1 2017

    Posted By: Anonymous Poster Date: Tuesday April 4, 2017 @09:53PM

    What has been the increase in price for a 1970 3 bed. semi in Carrickmacross since October, 2014

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  • Re: Irish House Price Report Q1 2017

    Posted By: 2Pack Date: Wednesday April 5, 2017 @01:56AM

    Irish house price rises are spotty. Dreadfully so as some posters have said.

    Rathdrum is too far away from jobs that might pay off a 380k mortgage. Once Facebook move their EMEA HQ to Rathdrum then that will all change.

    Meanwhile we wait, like most of Ireland does.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Joe Date: Thursday April 6, 2017 @05:03PM

    I was just speaking to an EA. He told me that by the end of 2017 people are going to be climbing over each other to buy a house.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Anonymous Poster Date: Thursday April 6, 2017 @06:40PM

    How is Brexit impacting the market?

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  • Re: Irish House Price Report Q1 2017

    Posted By: Joe Date: Friday April 7, 2017 @12:41PM

    Good point about Brexit, Maybe it needs an article done on it. It must surely have downward pressure short term as Sterling weakens. In the long term it may prove to be good but that is a far away point . I can't see British buyers rubbing their hands at bargains in rural areas if they don't get so much Euro for their Pound.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Anonymous Poster Date: Sunday April 9, 2017 @04:45PM

    It's brilliant. Making money while you sleep each night feels gooooood. I pity the renter's paying someone's mortgage and missing all this free money. I confidentialy predict prices will double in 5 years. All aboard!!! This train is leaving the station.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Anonymous Poster Date: Thursday April 13, 2017 @11:32AM

    Houses selling in months, weeks and sometimes days. A few years ago it would take years to sell. The market has changed and is continuing to change. House prices will rise, and rise significantly in many areas, and here is one reason....

    Houses in my area are still 50% below peak prices, but rising. With the exception of a few areas, Dublin etc. house prices are extremely good value, tell me what else that is half the price of what it was 10 years ago!!

    Potential savings of 100,000+ on peak prices, That's a once in a lifetime opportunity.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Anonymous Poster Date: Sunday April 23, 2017 @12:42PM

    Many homes are available for less than half what they would cost to build again. Our younger generation are sleepwalking into oblivion. The financially savy are cleaning up on buy to let whilst the youngsters play on their phones. They wake up in they thirties or early fourties...........bank of mum and dad to the rescue.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Bela Date: Tuesday April 25, 2017 @10:10PM

    The point is: current home owners believe the price in 2007 is the peak price, but the truth is, that was a high spike.
    The real value of the house I would guess about 30% less than it was in 2007. So if you bought a house in 2007 than you are a looser.

    Also last 3 years all estate agency tell tales about increasing demand. But they just pushing up prices.
    You know what happened. Everyone seen: no one was able to sell house during crisis. but from other hand: No one was able to buy a house.
    So basically that is why there was a spike on demand.

    Just check the year-on-year chart if you see Dublin house prices increased only a few percentage between 2015Q3 and 2016Q3. There was a significant fall since 2014Q3.
    Why? Because the demand is not that high as estate agencies say.
    And you can see about 8% increase from 2016Q4 that nothing else just the 20k support from government to first time buyers.

    Just calculate it:
    Previous year there was about 3% year-to-year inflation.
    8%-3%=5%.
    Average house price in Dublin Co: 400k.
    5% of 400k equal 20k (such a big surprise)

    So the question is, if government want to "boost" estate industry on year 2018 they will have to increase support to 40k?

    If you think I do not know what I am talking about, than just ask from your-self, why government does "help" for market if there is no problem?
    Also in 2007: What estate agencies did estimate? House prices will increase or decrease?

    My sort therm prognosis for the next year: Dublin house price inflation will fall back under 3%.(and this is the positive prognosis)

    About brexit: Most of the British companies looking for new base in Germany and French, just check HR reports. So Ireland should not expect to much capital from UK. Also Pound has not that much power as it have had a years ago.
    On other hand the UK is the biggest market for Irish export, and there is a good chance to loose this market or at least gain some disadvantage. Are you all sure the advantage of brexit will be more than disadvantage?

    You can think I want to freak you out, but my point is to avoid the next crisis. If no crisis than I won't loose my job.
    So instead of pushing up prices government should consider to take same real action to control Irish estate market.

    Before you think increasing house prices is good for Ireland, that is not true.
    It is not good for house sellers (ask those seller that had to sell their houses in 2012)
    It is not good for house buyers (ask those who bought house in 2007)
    And not good for an average Irish people(ask those who lost there job during crisis)

    Changing house prices only good for those people who manipulate it.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Bela Date: Tuesday April 25, 2017 @10:28PM

    One more thing:
    Still there are more than 110k Polish people in this country.(most of them rent house)
    During last few years only one thing was not increased, the minimum salary. (you can say there was 0.7euro increase two years ago, but that is basically means about 20(-15 PRSI) for a week)
    Majority of these people work on minimum salary.
    What will happen if another 60-80k people leave the country?

    I would say minimum salary must be raised very soon otherwise people who can't afford Irish rent prices will leave the country.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Anonymous Poster Date: Thursday April 27, 2017 @10:23PM

    Your views are wishful thinking. You want more money for the same work and too live in a nice home provided by a landlord who makes no profit. Do you see the problem?

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  • Re: Irish House Price Report Q1 2017

    Posted By: Bela Date: Saturday April 29, 2017 @02:06PM

    I live in house(that has quality under any EU standard) that landlord did not spend any money at all since I live here. (thanks for shine house and non-profit service)

    My opinion landlords had the profit 5 years ago. They raise rent every single year.
    Minimum salary was not really raised. These are facts.

    Also please do not describe my working moral. I am working much harder then my colleagues. I am the first in the building at the morning and I am the last at the evening, just because I love my job.
    And I actually get more than 30% less as my colleague in the same position and do half that I do.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Boris Date: Saturday April 29, 2017 @12:15AM

    I am from Lithuania and completely agree with Bela.Mostly people in Ireland has no knowledge about economy situation in Poland.Salaries on most places,for middle qualified work force is 700-800 euros per month home.Minimal wage in Dublin for couple is 3000 income per month.3000 minus rent,they could come back to Poland straight away and get same money there if they has money for buying own apartments.3000 minus 1600 for rent in Dublin is 1400,same they will have in Poland.For that reason,many people from Poland,started leave Ireland.Economy of Poland growing,life is a lot more cheaper than in Ireland.I worked with 12 guys from Poland,they all left Ireland during recesion and many of them happy in Poland now.There is some economy problems in Lithuania,but government started working hard.2-3 more years ,many emigrants will leave Ireland.Get ready.

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  • Re: Irish House Price Report Q1 2017

    Posted By: Bela Date: Saturday April 29, 2017 @02:17PM

    I do not expect from landlord to do not make profit.

    I just expect landlords to play fair game, and understand the consecquences of they decison.

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