House prices expected to rise 8% in 2018

House prices are expected to continue to rise by around 8% in 2018.

House prices expected to rise 8% in 2018

House prices are expected to continue to rise by around 8% in 2018.

The latest 'My Home' report shows they will increase at a slightly slower pace due to a tightening of the Central Bank lending rules.

Meanwhile, a new Daft report has found that House prices rose by more than €20,000 on average across the country during 2017.

Chief Economist at Davy and author of the My Home report, Conall MacCoille says homebuyers in Dublin have been taking out higher levels of mortgage debt.

He said: "The Central Bank has made a judgement about what is safe for people to borrow.

"In Dublin, that is where people are borrowing the most - the medium first time buyer is borrowing three and a half times their income.

"They are right up against their limit."

Home values in parts of the country could hit their Celtic Tiger peaks “within a year or two.”

In the Daft.ie report Ronan Lyons, assistant economics professor at Trinity College Dublin, said the substantial increase in house prices over the last four years meant that in a number of parts of the country, prices are now “within a year or two of reaching their 2007 peak” though he added that they are predominantly urban areas.

“Outside the main cities and the Greater Dublin Area, the typical region has prices that are still 45% below peak values,” he said.

While many of those closest to their Celtic Tiger level are in Dublin, there are exceptions, including Ballincollig in Co Cork, which is within 22% and Limerick City North which is within 20% of its peak.

Sandycove in Dublin is within 10% according to Mr Lyons.

“The peak of the Celtic Tiger housing bubble is not, of course, a target,” Mr Lyons said.

“Apart from those in negative equity, there is little reason to cheer prices as they rise year on year.

“What the bigger picture price trends tell us is that housing demand is focused in and around cities. Contrary to some of the political debate in Ireland, this is far from unhealthy.

“What is unhealthy is trying to impose a non-urbanised housing market on an urbanised labour market. Ireland is the least urbanised country in Europe – but this just makes it late, not different.”

Daft’s prediction for 2018 is that house prices nationally will rise by 5.7% which, it said, was the second highest reading since the series started in 2011.

In its report, MyHome.ie said the median asking price for new sales nationally was €242,000 in the final quarter of 2017 — in Dublin it was €330,000 compared with €195,000 in the rest of Ireland.

“For the entire stock of properties listed for sale on the website prices rose by 6.2% nationally and by 6.3% in Dublin during 2017,”

it said.

The company’s managing director, Angela Keegan, said housing market transactions grew by 10% in 2017.

“While the increase in transactions — it should come in around 55,000 for 2017 — is welcome the overall picture is that of an illiquid market hindered by the lack of fresh housing supply,” she said.

“If the Irish market was functioning properly we would be seeing around 90,000 transactions per year. At the end of the year the number of properties listed for sale had fallen to just 18,900. This is a fresh record low, down 9.4% on the year.”

Additional reporting by Stephen Rogers.

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