Mortgages

Irish property prices have increased by 50 per cent since 2013

Simon Moynihan

Simon Moynihan

Director

Irish property prices have increased by 50 per cent since hitting the bottom of the market in March 2013.

Figures published by the Central Statistics Office this week show that property prices have been steadily increasing nationwide since March 2013, with the recovery in Dublin beginning in May 2012.

The landmark 50% recovery in property prices was reached in November 2016 – the most recent date for which figures are available.

The latest Residential Property Price Index also shows that property prices have increased 8.6% in the year to November with almost every month showing price growth.

Houses in the West of Ireland showed the strongest growth with a one year increase of 16.7%. Dublin showed growth of 5.9%, while the Dublin district of Fingal showed the slowest growth in the country with an increase of 3.1% for the year.

Although property price increases have continued for almost four years now, the collapse was so severe that it wiped 54% off property values, and substantial further growth would be required for prices to reach boom levels again.

For property prices to hit their 2007 levels, they would need to grow by 46% from today’s prices.

Change in property values

According to the Property Price Register, in November 2016 the average sale price for a residential property in Ireland was almost €248,000. At the bottom of the market, that house would have sold for around €165,000. And to buy that house at 2007 boom prices would have cost €362,000.

Prices swings of this magnitude over such a short period of time show just how volatile the Irish property market has been. And despite the huge increases in property values since 2013, people who bought at the top of the market still have a long way to go to overcome negative equity. Homeowners who bought their homes prior to 2005 should be approaching parity by now though.

Further property price increases

At the beginning of January, the Central Bank relaxed their mortgage lending rules to allow first time buyers to buy a property of any value with a 10% deposit. This is likely to allow large number of first time buyers to enter the market much earlier that they would have been able to under the old rules which required a 20% deposit for any amount borrowed over €220,000. In will also increase competition for scarce starter homes which will likely drive up prices.

In addition, banks are actively lending and almost all mortgages now come with incentives as high as 3% cashback on new loans.

Looser lending criteria, active lending, and the current housing shortage are all likely to push house prices higher in 2017.

Property prices - then and now

According to the Property Price Register, the most expensive home sold in November 2017 was a Dublin house that went for €4,083,333. It’s an enormous amount of money but it was far from the only multi-million euro house sold in Ireland that month. A sign that the recovery is well under way... for some people. And with 54 houses sold for more than a million euro that month, could we be heading back down the same old road again?

Funnily enough though, in March 2013, which was the worst month of the property price crash, one house in Dublin sold for €14,000,000. And given the times, it was an absolutely staggering amount of money; more than three times as much as our current most expensive house.

The owner took a shocking haircut on that house though. Back in 2005, Sean Dunne bought Walford on Shrewsbury Road for €58 million – the most expensive house ever sold in Ireland... and at the time, sure nobody batted an eyelid.

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