Last year was the best year for house price growth in seven years and 2015 will see further price increases, although at more modest levels, according to the latest house price survey from MyHome.ie
Caroline Kelleher from DKM Economic Consultants said that while there was strong price growth in 2014 – the national mix adjusted asking price rose by 2.6% to stand at €194K – and strong transaction activity, uncertainty over a number of new developments in the market are likely to dampen the rate of price increase in the coming year.
“The Central Bank’s new guidelines on mortgage lending which are expected to introduce a Loan to Value limit of 80% for new lending along with separate proposals to restrict any residential mortgage to 3.5 times gross annual income have the potential to limit the rate of price increases seen in recent times,” Ms Kelleher said.
“However there is some uncertainty over whether or not these will be implemented as originally outlined. In addition the relief on capital gains tax introduced in 2011 to incentivise the purchase of property has terminated and this is likely to stem the rate of investment in Buy to Let properties in 2015,” she added.
“Last year we said the weak supply of new houses, particularly in the Dublin region, would be one of the main challenges facing the property market and this remains the case. Indeed changes to building regulations are adding to the cost of construction and could potentially limit new supply. This would suggest that any impediments to developing new residential units should be reviewed to ensure a more sustainable level of new house building,” Ms Kelleher concluded.
Ms Kelleher’s comments were supported by the latest figures which show a slight moderation in the rate of increase. In Q4 the mix adjusted average asking price nationally grew by 0.6% – down from 1.4% in Q3 – while the corresponding increase in Dublin was 2.2% – down from 3% in Q3. The latest increase brought the mix adjusted average asking price in the capital to €269K and the annual percentage increase in Dublin to 11.4%.
There was even stronger price growth for new instructions with the median price nationally up 16% in the year to Q4 while in Dublin the median price increased by 18%.
The Managing Director of MyHome.ie Angela Keegan said the substantial rise in transactions during 2014 was most welcome as was the price growth recorded for three and four bed semis in most counties around the country.
“The Property Price Register indicates that in the year to September over 27,000 transactions had taken place. Based on current trends total transactions in 2014 look set to hit the 40,000 mark, an increase of 38% on the 29,000 recorded in 2013. This is very heartening and while still short of the level required for a properly functioning property market it shows the recovery is gaining ground,” she said.
“The fact that the price of 3 bed semis rose in thirteen counties and remained unchanged in a further eight counties provides further evidence that prices are stabilising and the property recovery is spreading from urban areas. While consumer confidence is clearly returning it’s also clear that supply issues need to be addressed as a matter of urgency in several regions, especially in Dublin, Cork and Galway,” Ms Keegan concluded.
Read more and download the full report here.