House prices outside of
Dublin are expected to rise by as much as 20pc next year, as the rest of the
country begins to catch up with the capital
Dublin prices soared for much of this
year, although the market cooled somewhat in recent months. However, 6pc growth
is still expected in 2015.
Outside of the capital, where values are
much more affordable and therefore less likely to be affected, house prices are
expected to continue rising strongly through 2015 - by as much as 20pc.
A survey carried out for the Irish
Independent by the Real Estate Alliance (REA) shows that agents in Dublin
believe prices will rise by just 6pc next year.
Uncertainty caused by proposed Central
Bank restrictions on mortgage deposits has undermined confidence in the Dublin
property market.
This month's survey of more than 50 REA
member firms shows that the capital's property market has largely stalled in
quarter four from September to December
Agents said that it was now taking six
weeks to sell the average Dublin home - a rise on the April-to-June figure of
four weeks.
Agents in Dublin reported a flat
fourth-quarter in many areas, with some buyers simply taking a watching brief
due to uncertainty over the proposed Central Bank directive
"It is clear from our agents that
the lack of clarity from the Central Bank is having a large impact on
confidence. However, even if it is resolved, the supply issue still remains.
For a period for five years, the construction sector ground to a halt and we
are still feeling the effects of this through the lack of availability of new
homes," said REA chief executive Philip Farrell.
But commuter counties and the other major
cities are expecting a strong 2015 - with healthy demand and limited supply
being major factors, according to REA agents.
Westmeath showed the highest price growth
expectation for 2015 at 20pc, followed by Kilkenny, Clare and Galway city all
at 15pc. On the other end of the scale Sligo showed the lowest growth
expectation at 4pc.
Demand in the three main cities outside
Dublin is expected to remain high due to a lack of supply, with prices in Cork
expected to rise by 10pc, Limerick by a stronger 12pc and Galway City by 15pc
thanks to a shortage of good quality homes for sale in the Western capital
Commuter counties Meath (13pc) and
Kildare (11pc) have major towns with re-awakening property markets.
Meath, in particular, is reporting
impressive growth in Kells and Trim. However, there are no new developments
proposed for either town in 2015, unlike Navan, where prices are predicted to
rise by 15pc.
Meanwhile, REA agents in many parts of
the country are warning house building will not start until prices rise above
cost value. "The demand for new builds is there, but until prices reach a
certain level, some builders are reticent to begin developments," said Mr
Farrell.
"Overall, we are now seeing a
welcome return to a normally functioning market where you are likely to see
less volatility and, thankfully, more predictability. As the market started to
rebound, some of the high percentage recoveries that we saw in 2014 were quite
misleading, due to the limited number of transactions involved, and the low
price base that we were coming off."
Finally, the REA survey shows cash buyers reducing
significantly, from 70pc of transactions 15 months ago to about 40pc today.
Ireland's three-tier housing market
Despite much being said about Ireland having a
two-tier property market, evidence suggests that prices are moving in three
blocks:
Dublin
Dublin city and county became the first Irish
market to recover. It was in leafy Dublin 4 that property values first began to
inch up early in 2012, with affluent buyers swooping in. The impetus spread
rapidly outwards, suburb by suburb.
Driven by shortage, the looming end of tax
incentives for investors, and the last hurrah of cash buyers, 2014 saw prices
in Dublin increase by 24pc. This was the highest price inflation in the world
It is generally thought that Dublin
experienced a fall in values of up to 60pc since the bubble began to burst in
late 2006. It has meant that prices had room to inflate.
Latest evidence is that runaway inflation
is cooling.
Cities and commuter belt
After Dublin, Cork city was the next
market to recover. It went from static prices to a rapid rise at the end of
2013. This was spearheaded by an investor feeding-frenzy at the bottom, with
apartments snatched up.
Galway soon saw its prices begin to surge
in a similar fashion and Limerick was next. Cork and Galway are now both
experiencing similar issues to Dublin.
Meanwhile, the belt of commuter counties
around Dublin - where prices had been hit especially hard in the downturn -
also began to recover late in 2013. This occurred as first-time buyers started
being priced out of Dublin.
The rural counties
These counties - the last to be hit by
the property crash and the last to recover - began to see prices rise again in
early 2014.
Buyers pounced on what they believed to
be the cheapest prices in a generation.
Central Bank lending restrictions will
certainly have an impact but, at the same time, it won't be as much of an
obstacle to buyers. When a semi-detached house can cost €100,000, a deposit of
€20,000 is more achievable
