Dublin homes will hit boom prices within a year, report says

The cost of an average-sized family home in some Dublin locations will top boom-time prices within a year, a new report has claimed.

However, its authors have played down fears that another dangerous property bubble is inflating.

The new pricing survey from the Institute of Professional Auctioneers and Valuers (IPAV) puts the average cost of a family home in selected areas of the capital at just under €518,000, more than twice the State-wide average.

According to the pricing survey – the first to be published by the group representing the auctioneering sector – the average price of a three-bedroom home nationwide is a little more than €253,000.

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The Residential Property Price Barometer points to huge price discrepancies depending on location and suggests the average price of a three-bedroom semi-detached home in Dublin 4 is now €975,000 compared with just €90,000 for a similarly-sized home in Longford.

The pricing survey is based on sales figures between January and June of this year and is just the latest piece of research suggesting house prices are coming close to boom-time levels.

"I don't think people should be alarmed by the scale of the price increases and I don't think we are anywhere near bubble," the chief executive of the IPAV Pat Devitt told The Irish Times.

He played down comparisons which show Irish house prices rising at dramatically faster rates than EU averages.

‘Properly functioning’

The most recent data available from Eurostat showed Irish house prices increasing at the fourth highest rate in Europe with an annual rate of increase of 8.9 per cent, or almost twice the average rate across the EU.

“People think estate agents want to see prices climbing higher and higher but that is not the case. We have to keep selling and to do that we have to have a properly functioning property market and I don’t think the market here is functioning properly yet.”

He said an absence of supply rather than easy access to cheap credit was what was pushing prices higher in some – but not all – areas.

“This has been said over and over again but the reality is the supply just is not there. There is not enough houses being built and if we don’t do anything about that prices are going to keep going.”

He said that builders needed to be incentivised to build homes in significant quantities again or, at the very least “be given access to a Government fund from which they could draw the finance to build. If such a fund was put in place then the Government would be able to guarantee prices at the end of the process.”

The latest Central Statistics Office (CSO) data published in the middle of last month – which does not break down prices based on home size – also pointed to rapid price growth, with the cost of buying a home in June 11.6 per cent higher than it was 12 months previously.

In the year to June, CSO figures put the national average market price paid for a home at €258,544, or €401,890 in Dublin.

Over the year, Dún Laoghaire-Rathdown was the most expensive area to buy a house in Ireland, with an average price of €580,902. The least expensive county in which to buy a house was Co Longford, with an average price of €93,912.

According to the CSO figures, house prices nationally are now just 29 per cent lower than the highest level reached in 2007, while Dublin prices are 29.9 per cent lower than their February 2007 peak, and property prices outside of Dublin are 34.6 per cent lower than their May 2007 peak.

Meanwhile, recent figures from The Irish Times-owned property website myhome.ie put the average asking price nationally for a three-bed semi-detached house at €251,500, an increase of €24,000 in the last six months.

The corresponding figure for Dublin was €360,000, an increase of €32,000 on six months ago.