House prices forecasted to continue to rise but at slower rate
House prices will continue to climb through 2019 with the latest MyHome.ie property report forecasting a 5% increase.
But the report, published in association with wealth management company Davy, notes that tightened Central Bank lending rules and the prospect of Brexit could cause a slowdown in inflation this year.
MyHome.ie’s Q1 Property Report forecasts that house price inflation will increase by about 5%.
Asking prices are continuing to increase but there was a slight slowdown in inflation in the second half of last year. This trend has also continued into the first quarter of 2019.
Annual asking price inflation in the first quarter of 2019 was 3.3% nationally and 1.1% in Dublin, down from 6% and 3%, respectively, in the fourth quarter of 2018.
Prices are continuing to rise, though, with asking prices for newly listed properties up by 2% in the first quarter of this year.
The median asking price for new sales is €271,000, up €5,000 from the last quarter. In Dublin, the asking price is €380,000, also a €5,000 increase.
In Cork city, prices are up 1.6% to €249,000, with county areas now at €235,000, up 4% from this time last year. Limerick prices have increased to €195,000, an 18% increase, which is by far the biggest growth in the province.
Prices in Clare increased by 2.3% to €189,000, while in Kerry they are now €185,000, a 5.7% increase. In Tipperary, an 8% rise saw asking prices at €165,000, while prices are flat in Waterford at €170,000.
Conall Mac Coille, chief economist with Davy Research and author of the report, said prices will continue to climb but at a slower rate due to tightened Central Bank rules.
“At the beginning of 2018, the median loan-to-income (LTI) ratio among first-time buyers in the capital was already 3.5 times income and therefore close to the regulatory threshold.
"The tightening of the Central Bank lending rules and the resulting slowdown in price inflation was always going to be felt first in the capital.
"It also appears that price expectations in early 2018 were unrealistic and a period of adjustment has taken place as a result,” said Mr Mac Coille.
The analysis suggests that the slowdown has been concentrated in the most expensive property types and areas, though.
Mr Mac Coille said:
“The median asking price for four-bedroom detached houses in Dublin is flat on the year at €650,000.
However, prices for one-bedroom apartments are up 10.5% on the year to €210,000 while the price of two-bedroom apartments are up over 8% across Dublin. Despite the current slowdown, we still expect Irish house prices nationally to rise by 4% in 2019.
Angela Keegan, managing director with MyHome.ie, said that asking price inflation is likely to continue at a rate of “around 5% in 2019” but warned of Brexit could cause uncertainty.
“If the uncertainty is resolved, robust demand and rising household incomes will continue to push house prices higher,” she said.
However, there are few signs that Brexit has had an impact yet, the report notes. Activity remains strong in the market.
This month, 21,250 properties were listed for sale on MyHome.ie, 13% more than in March 2018, with the number of listings in Dublin increasing by 35% year-on-year.
New housing completions are also expected to increase this year, though they will remain significantly lower than the natural demographic demand of 35,000. There were 18,100 completions last year and 22,500 commencements.
The report forecasts the number of completions to increase by up to 25% this year.
