A new report from estate agents Douglas Newman Good is predicting property price increases of between 5% and 10% in 2015 versus the 23.5% increase recorded to the end of 2014 in Dublin.
In a statement released this morning, DNG welcomed the fact that the Central Bank has now clarified its intentions regarding mortgage deposits, insisting that the uncertainty was not good for the market over the last number of months. DNG also welcomed the fact that the Central Bank has relaxed the restrictions for first time buyers from those initially proposed.
According to the ‘DNG Annual Review 2014 and Outlook 2015’ report property prices rose by an average of 1.9% per month last year with the main burst of house price inflation in the first 6 months. This tale of two halves is reflected in the 8.9% first quarter rise in house prices, which softened to 2.2% in the last three months of the year.
The latest results mean that the average price of a resale property in Dublin has now risen for the tenth consecutive quarter to €373,981, an increase of €63,000 in the last 12 months alone.
Although home prices increased in value by 23.5% to the end of 2014 it peaked at 25.2% in the 12 months to the end of June 2014. Although the second half of 2014 saw some price moderation it is still significantly higher than the 17.8% increase recorded for 2013 as a whole and prices have now risen by 54% since that low point in 2012.
Although south and west Dublin saw a 2% increase in the last quarter, the northside witnessed price inflation in excess of 2.9%. This stands in contrast with the annualised 28.9% increase in west Dublin properties reflecting average lower prices and strong demand from first time buyers.
Overall prices in all areas of the city remain approximately 50% below their peak levels and 50% above the lowest point in the market.
Only the higher end of the market recorded price increases lower than the overall average increase in 2014, with prices in the range above €500,000 rising by 17.4% on average. In contrast, property price inflation at the entry level to the market (values less than €250,000) saw a rate of increase of almost 40%, double the rate of increase seen at the top end of the market, and the market as a whole in 2014. Entry levels properties also led the market in the last 3 months with an average 3.1% jump.
According to Keith Lowe, CEO, DNG: “It is clear that whilst the property market in Ireland is showing signs of recovery, it is still not operating normally. Transactions per population were estimated by DNG Research to stand at 2.9% in Q4 2014 versus 3.5% for Northern Ireland and 4%-5% for England, Scotland and Wales Scotland for the same period.
“Property prices have risen very strongly in the sub €250,000 price category in the last 12 month which has been mainly fuelled by strong demand from investors purchasing entry level homes suitable for investments such as city based 1 and 2 bed apartments. Purchasers who acquired properties last year can now hold on to them for 7 years, dispose of them, and pay no Capital Gains Tax (CGT).
“It is difficult to gauge at this early stage the likely effects of the new Central Bank mortgage lending rules announced yesterday. Undoubtedly the clarity is welcome and will take out some of the uncertainty in the market place. Our initial views are that the overall effect will lead to potential buyers renting for longer and as a consequence upward pressure on rents especially in the capital and other key urban areas.
“Time will tell whether the new rules will have a negative effect on the new homes construction sector, which is vital to continued economic recovery and whether the government as previously stated will introduce an insurance bond to assist further growth in the construction sector.
“On pricing for the year ahead we anticipate moderate price rises in the middle to upper price regions in the main urban areas and that entry level priced homes under the €220,000 threshold will perform better than the average.”