House price inflation slows again as higher borrowing costs cool market

House price inflation slowed again in September as higher borrowing costs and cost-of-living pressures put the brakes on the market.

The latest Central Statistics Office (CSO) figures show the rate of increase in prices – in annual terms – fell to 10.8 per cent in September, down from almost 12 per cent the previous month, extending a pattern of deceleration seen in recent months.

Year-on-year inflation in Dublin fell to 9.4 per cent, down from 9.8 per cent, while price growth outside the capital was put at 11.9 per cent in September.

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The CSO’s latest figures indicated an increase in transactions in September. According to the agency, there were 4,583 dwelling purchases by households filed with Revenue. This was up 6.7 per cent on the previous month. The total value of transactions for September was €1.7 billion.

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The European Central Bank on Wednesday warned that property markets may be “at a turning point” as the rise in borrowing costs dents demand for new loans. “There are signs that the real-estate expansion of recent years could come to an end, with overvaluation estimates and mortgage rates now standing at their highest levels in more than five years,” the ECB said.

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Industry professionals here believe the Irish market will experience a slowdown but not a price correction.

The CSO data indicated that households paid a median (midpoint) price of €299,500 for a property in the 12 months to September this year. The Dublin region had the highest median price (€422,000) and, within the capital, Dún Laoghaire-Rathdown had the highest median price of €615,000. The highest median prices outside of Dublin were in Wicklow (€416,666) and Kildare (€360,000), while the lowest was €148,500 in Longford.

Property prices nationally have increased by 128.8 per cent from their trough in early 2013, the CSO said.

It also noted that Dublin residential property prices are 5.6 per cent lower than their February 2007 peak, while residential property prices in the rest of Ireland are 1.2 per cent higher than their May 2007 peak.

“Prices and transactions continued to grow in September in Ireland. With mortgage rates relatively unchanged despite European Central Bank rate rises, there are no signs yet of demand being curtailed,” Goodbody chief economist Dermot O’Leary said.