The Irish Times:Slowdown in property price growth

Author: GPD Ireland | Date: 16/05/2019

House price growth has slowed again, rising by just under 4 per cent in the year to March the lowest annual increase since 2013.


Residential property prices increased by 3.9% during the 12 month period, down slightly compared with the year to February, when inflation was running at 4.3 per cent.


However, the rate of increase was down significantly compared with the same time last year, as house prices surged by 12.6 per cent in the 12 months to March 2018.


Growth was particularly subdued in Dublin, with house prices increasing by just over 1 per cent in the year to March 2019. However, the rate of growth was faster outside of the capital with prices increasing by almost 7 per cent.


The mid-west region recorded the fastest growth outside of Dublin, up by 11.9 per cent compared with the previous year, while the smallest rise was recorded in the mid-east, which was up by 1.6 per cent.


Analysts earlier this week reduced their expectations for house price growth. Davy stockbrokers said in a briefing note that it expected house prices to rise by 4 per cent this year. down from a previous estimate of 5 per cent/ The rate of house price inflation has been cooling off after years of rapid growth, when double-digit inflation was common.


Many analysts said that this was likely to be due to the Central Bank’s lending rules, which put a cap on how much someone is allowed to borrow for a mortgage relative to their salary. In most cases, this is 3.5 times earnings. This rule was put in place to prevent a repeat of what happened during during the economic downturn between 2008 and 2012. During this time many people borrowed large sums of money from banks that they were unable to repay when the economy crashed.


House prices have risen sharply since 2013 and have reached a level where more and more people are struggling to meet the requirement set out by the Central Bank. This means that fewer people are able to buy homes, which has somewhat cooled demand.


Aaron Willis, general manager of GPD, a property development company, said that while price growth was slowing, that would be of little comfort to many consumers who are struggling to buy a home.


“We need to do more to bring down the cost of land” he said. “The industry’s labour force issues have to be tackled, namely rising wage costs and trade workforce shortages.”





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