Dublin ‘showing overcapacity signs’ amid record cost of housing

Dublin is showing signs of overcapacity amid record costs for housing in the capital, a study has found.

The Dublin Economic Monitor, funded by Dublin City Council, also found consumer confidence in the economy fell in the capital amid fears over the Brexit fallout.

The study said although Dublin remains a strong economic centre, the “city is showing the symptoms of overcapacity, with the cost of residential housing at an all-time high”.

Capacity constraints in the city may be impacting on businesses’ ability to recruit and attract workers from overseas, it said.

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The pace of house price inflation has slowed, with a 6 per cent increase year on year to August. This compared to nearly twice that rate the previous quarter.

House prices in Dublin are now at their highest level since late 2008 - and nearly double what they were at the lowest point in the property market, in early 2012.

The study, produced by EY-DKM Economic Advisory, found average monthly rent in Dublin has been more than €1,500 since the last quarter of 2017. The city topped the annual European Buy-to-Let League Table as the best location for rental investors, for the third year in a row, the report said.

The report found consumer expectations for the future fell by 16 points in Dublin over the past year, and seven points outside of the capital. Consumer sentiment in Dublin also declined by 12 index points, the quarterly economic monitor said.

The seasonally adjusted unemployment rate in Dublin was 5.2 per cent. The last time unemployment was this low in the capital was the start of 2008, the report said.

The hotel occupancy rate in the city was 82 per cent in September, with average hotel rates at €145 a night, a 6 per cent rise on prices last year.

The economic monitor warned, despite estimates the hotel sector would supply an extra 5,400 beds in the next two years, hotel bed demand will outstrip supply by 1,100.

In the third quarter of this year, July to September, Dublin Port handled 9.6 million tonnes of cargo. This represents a 4 per cent increase in cargo passing through the port on the third quarter of 2017.