According to a survey carried out by the Central Statistics Office (CSO), property prices in Ireland increased by 12.1pc from January 2017 to October 2017. Clearly, this rate of increase is higher than the rate of inflation in January 2016 to October 2016, which was only 7.5pc.
The rate of inflation keeps fluctuating
The 12.1pc rate of increase demonstrates the failure to slow down property price inflation in Ireland. However, this increase shows a slight fall as compared to September, when the rate was 12.2pc. The new figures according to the CSO represent a dramatic recovery in Ireland’s housing market ever since the banking crisis and property price crash in 2009.
West of Ireland is mostly affected
The highest rate of inflation was recorded in the west of Ireland where prices rose up to 15.8pc. In the year to the end of February, the housing market in Dublin was just more than 8pc while in the west parts, prices increased by almost 20pc. The CSO didn’t have any data to explain this huge rise in prices. Nevertheless, a spokesman believed that the rate of inflation could be explained by the region experiencing a growing demand. Indeed, the west of Ireland lagged behind significantly after the recovery in the capital. With only a few large operators building residential properties in Dublin, there is a tendency to raise prices and build in areas that require high prices.
Residential prices in the capital increased by only 11.6pc
The rate of residential price increase was lesser – 11.6pc – in the capital of Ireland. The highest increases were in the South Dublin Council area with values rising by 14.4pc while the lowest growth was noted in Dún Laoghaire Rathdown jurisdiction with a rate of 9.7pc.
House prices are expected to rise further
Residential property prices in Ireland are expected to rise at the fastest rate in Europe. According to the Standard & Poor’s, house prices will increase by another 7pc in 2018. It is predicted that the labour market will be stronger than ever and there will be housing supply shortages in particular areas. Yet, due to the Central Bank tightening its mortgage lending rules, house price inflation is bound to slow down to 6 or 7pc.
Chief Economist at Davy, Conall MacCoille reveals that increase in house prices will reduce the number of people in negative equity. More Irish households will now want to move home, thus helping the housing market.
Home Building Finance Ireland scheme is a boon to developers
Housing is the biggest and most urgent Government challenge in Ireland. Therefore in the October 2017 Budget, the Government promised to offer interest rates of between 4% and 7% to home builders under the Home Building Finance Ireland (HBFI) scheme. The Government also allocated €750 million of the Ireland Strategic Investment Fund available for commercial investment in housing finance. The purpose of the scheme was to ease the housing crisis. According to research, HBFI will increase the availability of debt funding on market terms to residential development projects.
However, after the budget, it is now believed that the loan interest rates could be of as high as 8pc. It is also predicted that these changes may occur only in 2018 while nothing has been finalized yet.
Related articles published in The mechanisms of personal insolvency in Ireland :
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- Rent increase disputes are on the rise after price cap
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