Property professionals are expecting Dublin house prices to rise by an average of 8 per cent this year.
A survey of chartered surveyors, auctioneers and estate agents also pinpointed the lack of second-hand homes and new builds as the main driver of price.
The study, carried out by the Central Bank in conjunction with the Society of Chartered Surveyors Ireland, found expectations for house price growth nationally had moderated from 8 per cent to 7 per cent in the first quarter of 2017. However, it found expectations in Dublin had risen from 6.5 per cent to 8 per cent.
The survey noted that price expectations over three years have now recovered to levels last seen in late 2014, before the Central Bank introduced its mortgage lending restrictions.
The median expectation for house price growth over the next three years was put at 15 per cent nationally.
The figures for Dublin are still lower than at the time of the introduction of the Central Bank’s measures, with expectations for price growth of 8 per cent for the year ahead, while the three-year expectation was also put at 15 per cent.
In every region the majority of respondents said they expected house prices in their areas would be higher in the next yer and over the next three years, while no region anticipates a price decrease over the corresponding time horizons.
Second-hand housing
The mid-west and Dublin regions anticipated the biggest one-year price increases . The three-year median expected house price change in several regions including Dublin, Border, west and mid-west to match that of the national level at 15 per cent, but no region exceeds this figure.
Respondents consistently highlighted the availability of second-hand housing stock and the construction of new units as the key factors influencing house price developments nationally.
Between them these two factors constitute 68 per cent of all respondents’ primary factors, significantly more than this time last year.
In Dublin, access to bank credit was viewed as a greater factor than the construction of new units. “Over time a diminishing share of respondents have viewed the macroprudential rules as a primary issue affecting house price expectations,” the survey noted.
A number of respondents also highlighted Brexit in additional comments as a contributory factor to expected house price developments.
The survey also found there had been a noteworthy increase in the share of respondents noting a pick-up in sales activity on the previous quarter, with greater levels of sales agreed and sales completed.
Activity levels
These greater levels of activity are primarily attributable to Dublin compared to the regions, while the majority of regional-based respondents considered activity levels to be “approximately the same” as the previous quarter.
According to the latest property price index from the Central Statistics Office (CSO), the State's official barometer, property prices rose 10.7 per cent in the 12 months to the end of February.
The year-on-year increase was nearly three percentage points higher than the annual rate of inflation recorded in January, and comes on the back of a string of indicators pointing to a pick-up in house prices in the first quarter of 2017.
The Government’s new tax-incentive scheme for first-time buyers and a loosening of the Central Bank’s lending rules have been blamed for stimulating demand in the absence of an adequate housing supply.
Attention is now focused on the CSO’s next batch of figures for March, which will be released on Wednesday.
