House price growth slows to 3.6%, lowest rise in two years

The annual rate of house price growth in the State is continuing to slow in the face of higher interest rates and wider cost-of-living pressures. The latest residential property price index also points to a significant fall-off in transactions in April with purchases down by more than 20 per cent, one of the clearest signs yet that higher mortgage costs are pricing some potential buyers out of the market.

The index shows prices nationally increased by 3.6 per cent in the 12 months to April this year, down from an annual rate of 4 per cent in March.

The was the lowest rate of increase recorded in two years and comes in the wake of seven consecutive interest rate rises from the European Central Bank. The bank is expected to lift rates by a further quarter point (0.25 per cent) on Thursday, heaping more financial pressure on the State’s 250,000 tracker mortgage holders.

In Dublin, the annual rate of property price inflation fell to just 1 per cent, while house prices outside Dublin were 5.6 per cent higher than a year earlier.

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On a monthly basis, house prices across the State were flat in April. This followed three consecutive months of decline. In Dublin prices fell again in April (-0.6 per cent), marking the seventh straight monthly decline.

The latest data, collated by the Central Statistics Office (CSO), show there were 3,262 dwelling purchases by households in April. This represents a 21.1 per cent decrease compared with the 4,132 purchases in March, the CSO said, noting the total value of transactions filed in April was €1.2 billion.

This was one of the largest monthly declines in transactions.

Households paid a median or midpoint price of €313,000 for a residential property in the 12 months to April this year. The lowest median price paid for a dwelling was €160,000 in Longford, while the highest was €634,998 in Dún Laoghaire-Rathdown.

Property prices nationally have increased by 126.7 per cent from their trough in early 2013, the agency said. Dublin residential property prices, meanwhile, have risen by 125 per cent from their February 2012 low, while residential property prices outside of the capital are 136 per cent higher than at the trough, which was in May 2013.

The Institute of Professional Auctioneers and Valuers (Ipav) said the increase shown in today’s figures is unsurprising, given what agents are reporting, with prices stronger outside of Dublin in the midlands, mid-east and southwest, areas where prices have been much lower than in the greater Dublin area.

“Prices tend to ebb and flow with nothing dramatic happening, and this is not unusual. They are now moving up again with the shortage of supply keeping prices elevated,” said Ipav chief executive Pat Davitt.

“There is still a high proportion of buyers purchasing without a mortgage, possibly up to 40 per cent, and of course the bank of Mum and Dad is extremely active,” he added.

“Unfortunately, this market does nothing for those without such resources. A market that doesn’t serve the needs of broad swathes of our population, particularly first-time buyers, is dysfunctional,” Mr Davitt said.