House prices are continuing to rise but at a slower pace, according to a new report.
MyHome.ie, in association with Davy, has found that house price inflation fell from 9.5% in the first three months of the year to 7.2% at the end of the second quarter.
That is the slowest rate of inflation in two years.
The decrease in asking price inflation was even lower in Dublin as it went from 11% at the start of the year to 6.8% at the end of Q2.
The author of the report, Conall MacCoille, Chief Economist at Davy, said that the slowdown in house price inflation should be welcomed as double-digit price growth could not be sustained over the long term.
“The Celtic Tiger years demonstrated the folly of allowing rising leverage in the mortgage market to drive double-digit house price inflation indefinitely. This time round, the Central Bank’s 3.5 X loan-to-income (LTI) threshold is preventing households from chasing prices higher by taking on excessive mortgage debts.”
“We would normally expect the slowdown in asking prices to feed through into transaction prices within the next three to six months.
"For now, we are seeing stronger price gains in less expensive areas of Dublin and among the less expensive property types. For example, one-bedroom apartments in Dublin are up 11.4% on the year but four bedroom detached houses are only up 2.3%”
[quote]“Of course, Ireland still faces an acute housing shortage but unlike the past there is a more sensible debate on how to solve the problem."[/quote]
Angela Keegan, Managing Director of MyHome.ie said the improvement in stock levels, particularly in Dublin was most welcome.
“Our data shows that stock levels nationally are up 3.7% on the year to 21,600, the first positive growth since 2015. In Dublin where the housing shortage is most acute, stock has risen by 25% to 5,000 homes which is very positive.
"While we are still clearly in the midst of a housing crisis, all the key indicators are moving in the right direction as we inch closer to a normally functioning property market,” she said.
Full details of the report can be found at www.myhome.ie/reports
- Digital Desk