Residential property prices are expected to continue to rise into 2015, despite challenges such as the Central Bank’s proposals to restrict mortgage lending, Sherry Fitzgerald said on Friday.
Pointing to the constraints in supply allied with a recovery in demand, the estate agency group said that there is “every reason to believe that prices will continue to rise at above trend levels in the short term in many locations”, adding that the trend will be particularly evident in the urban centres where supply is most constrained. It will be “ some time” before the mismatch between demand and supply is rectified, Sherry Fitzgerald said, adding that it will therefore be some time before the market truly stabilises.
“In the interim, there is likely to be some volatility with above trend price and indeed rental inflation in urban centres.”
In 2014, house prices rose by 16.3 per cent, with Dublin experiencing a higher growth rate at 18 per cent. Residential property outside Dublin was up 13.9 per cent.
And it wasn’t just property prices that rose in 2014 - activity levels increased too. With some 40,000 properties sold nationally last year, activity levels jumped by 33 per cent according to Sherry Fitzgerald, while the growth in activity was more marked in Dublin, with a growth rate of 40 per cent, up to about 14,000 transactions.
Marian Finnegan, chief economist Sherry FitzGerald, said that 2014 was undoubtedly "a fragmented year" for the Irish property market.
“For the Dublin market the year opened to very tight supply and pent- up demand resulting in buoyant price inflation, of 12.6 per cent in the first six months. That said, an increase in supply and a more temperate demand outlook saw price growth rates effectively half in the latter six months with overall growth for the year coming in at 18 per cent,” she said.
Pat Davitt, chief executive of the Institute of Professional Auctioneers & Valuers (IPAV), agreed that price growth in the latter half of the year was “more muted”.
Looing to the future, the outlook for 2015 is "challenging" Sherry Fitgerald said, pointing to the recent intervention by the Central Bank to minimise the risk of another credit driven property bubble by limiting loan to value and loan to income ratios.
“If the Central Bank is tempted to follow through on its original proposal insisting on 20 per cent deposits for the majority of buyers it would be an unmitigated disaster,” Mr Davitt said, adding that “joined-up thinking” was needed.
