Economy

Irish property price slowdown described as a ‘temporary pause’

Savills says the fall in prices at the end of last year was a result of potential buyers’ tactics

Most forecasters are predicting property price inflation of 8% for 2017. Image: iStock

Sat Feb 11 2017 - 04:55

The first reversal in house-price growth in several months was immediately explained away by Savills as a “temporary pause”.

The estate agent claimed the 0.4 per cent fall in prices in December, the first since March, was simply tactical, with potential buyers holding off in the belief that they would have more buying power on the back of the Government’s new tax incentive scheme for first-time buyers and a loosening of the Central Bank’s lending rules.

“Towards the end of last year there was much speculation about two potential housing policy changes – the possible easing of mortgage lending restrictions and the prospect of a new help-to-buy scheme,” said Savills director of research John McCartney.

“Anticipation of these measures almost certainly caused some potential buyers to hold off in the belief that they would have more buying power if these policies came to fruition.”

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McCartney backed up his claim by citing other Property Price Register data showing that house sales fell 23 per cent year-on-year in December.

So the two policy measures widely criticised for potentially adding fuel to the fire have caused a “temporary pause” in the growth trend.

The logic of the argument is that now the policies are bedded down, the rat race can begin again. Such are the vagaries of Ireland’s property game.

Annual growth

The latest figures show annual growth was broadly unchanged at 8.1 per cent compared to 8.2 per cent in November.

In Dublin, the level of annual inflation remains in single-digit territory at 5.7 per cent; the mid-east commuter belt counties (7.6 per cent ); and the Border region (8.9 per cent ).

Across all other regions it exceeds 10 per cent: 12 per cent in the midlands; 17.8 per cent in the west; 10.8 per cent in the mid-west; 15.4 per cent in the southeast; and 13.3 per cent in the southwest.

Needless to say, property price forecasting is not an exact science; it’s probably something closer to palmistry.

Most forecasters predicted inflation of around 5 per cent for last year. Now they’re predicting 8 per cent for 2017. Can we put much store in that? Absolutely not.

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