House price growth in Dublin continues to slow as rising inventory and the unwinding of Covid-related demand ripples through the market, according to DNG. The real estate agent also pointed to the moderating effect of rising interest rates.
The company’s latest house price indicator suggested the average price of a resale property in the capital rose 6.4% in the year to September, compared to a rate of increase of nearly 10% a year ago. The quarter-over-quarter price increase was just 0.4%, the lowest level of increase in nearly two years. DNG chief executive Keith Lowe predicted that the overall growth rate could fall to just 2% next year.
“One of the factors behind price stabilization is the increased supply on the second-hand market, with 25% more resale properties available to buy now in Dublin compared to a year ago,” he said.
“This is no doubt partly due to the continued sale of rental properties as landlords continue to exit the rental market,” Lowe said, noting that smaller landlords are selling because of the tax regime, which when PRSI and USC is factored in, along with management fees, property tax and other associated costs, making many rentals “economically unviable”.
[ House prices show fresh signs of slowing as annual rate of increase falls to 13%, CSO figures show ]
He predicted a further moderation in price growth next year – up to 2-3% – given “current inflation and the opposing interest rates that exist”.
DNG’s latest report also detected a slowing price trend in the capital’s apartment market, with the average price of an apartment in the year to September rising 4.4%, down from 7, 4% a year ago.
The agent said North Dublin saw an above average rate of price growth in the third quarter, with house prices increasing by 1.2% and apartment prices by 1.1% respectively in the during the period. DNG cited relatively more affordable property prices north of downtown and the proposed MetroLink rail project as reasons for the above-average price growth.
“In line with our forecasts from the beginning of the year, the rate of increase in residential property prices in the capital continues to slow, with the DNG house price indicator recording a slight increase in prices in the third quarter, this which is good news for buyers,” said DNG Director of Research Paul Murgatroyd.
“Increased inventory on the market this fall, the unwinding of Covid-related pent-up demand and rising interest rates are all contributing to a reduction in the rate at which residential property prices are rising in the capital,” did he declare.
Mr Murgatroyd also noted that “levels of residential transactions conducted by the agency have been very high in recent months, exceeding the same period last year by 13%.
Mr Lowe said: “It is welcome to see house prices in the capital stabilizing this quarter, as the level of house price inflation seen in the market in recent years was clearly unsustainable. In Overall, prices are expected to rise about 6% this year compared to the end of last year.”
On the continued exodus of smallholders, he said: ‘Our analysis shows that outside of Dublin almost 30% of all homes currently advertised for sale across our national network are ex-rental properties, while that in Dublin the figure is 23. per cent.
“This puts additional pressure on the rental sector, as the majority of rental properties currently sold are subject to rent caps and rented below market rent levels,” he said.
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