House prices continue to rise, but at slower rate
House prices in Ireland are continuing to rise, but at a slower rate than before - with Dublin prices on the decline.
The latest official report on sales revealed values have fallen for two months in a row in the city, mimicking the pattern from the start of the year after the Central Bank announced new strict mortgage lending rules.
According to the Central Statistics Office (CSO), the picture outside Dublin showed continued recovery in property with an increase in prices of 0.4% last month and 1.7% over the previous three months.
The market overall is almost 11% higher than this time last year, the report showed.
Analysis from Davy Stockbrokers revealed that Dublin asking prices over the first half of the year experienced their weakest rise in two years.
Its report on the market said it expects inflation in the property market to continue to slow down as the year goes on.
Looking back over the last seven years since the peak of the housing bubble, the CSO said values of houses in Dublin are now almost 37% lower than they were in early 2007 while nationally the market is still 41% behind where it was when the crash began.
Davy said it estimates that Irish house prices are now valued at around five times average earnings, similar to the market in the UK, but in Dublin they are six times earnings.
And it warned that affordability is starting to act as a constraint.
John McCartney, research director at estate agency Savills, said the rally seen in the second half of recent years is unlikely to be repeated this year.
"Agents are reporting that there has been a definite cooling in the market," he said.
Savills said the cooling in the Dublin market was inevitable after months of rapid growth in the second half of last year and strict mortgage lending rules since February.
"Therefore we expect price growth to be modest at best for the remainder of this year," Mr McCartney said.
"Looking further ahead, the detailed demographic data show that Dublin's population has picked up strongly as people follow the jobs. Given sluggish house building, this will keep upward pressure on prices in the long run.
"However, given affordability constraints, cash funded investors rather than owner-occupiers may move to the forefront in the next phase of the market."
