Surging Dublin Property Prices Spark Fresh Investor Interest
iNVEZZ.com Monday, August 26th: The tale of Ireland’s property market boom and bust is well known to both domestic and international investors. Real estate prices in the country have halved since 2007 and fallen further than in any other Western economy since the financial crisis. Yet, as of recent, the market has started to show signs of recovery, brightening up the prospects for property investment in Ireland. But is it time to reconsider the country’s potential as a place in which to buy real estate?
**Market Recovery Underway but Still Has Long Way to Go, Official Data Suggests**
“Relative stability” is how a recent residential market report from estate agency Sherry Fitzgerald has described Ireland’s property market. Marian Finnegan, the estate agency chief economist, has said that it is a market beginning to find its feet again, with strength returning, especially to Dublin and surrounding areas. In the first six months of this year, the average Irish house price rose 3.6 percent, according to Sherry Fitzgerald’s report, while Dublin prices increased 6.1 percent on average.
Recent official data has supported the estate agency’s observation. According to figures released last week by Ireland’s Central Statistics Office (CSO), residential property prices in the country increased last month by 2.3 percent year on year and 1.2 percent month on month. The figures followed a 1.2 percent monthly rise in June and a decrease of 13.6 percent recorded in the 12 months to July 2012, showing that the recovery has started in the last few months.
Despite the recent increase in prices, however, the CSO noted that property prices in Ireland still have a long way to go to recover lost ground. According the statistics office’s estimates, the national house price index is 49 percent below the peak reached in February 2007. House prices in Dublin are 52 percent lower than their highest level reached in early 2007 just before the economic crash. Apartment prices in
Dublin are 59 percent lower than they were in February 2007.
**Capital Boom to Drive Further Rises, ESRI Predicts**
According to the CSO data, Dublin was leading the Irish property market recovery with July prices up by 3.3 percent month on month and eight percent higher than a year ago. Supported by rising demand and supply lagging behind, house prices in the Irish capital grew 3.6 percent last month and were 7.5 percent higher compared to the same time a year earlier, while Dublin apartment prices were 11.6 percent higher than in July 2012.
News that Irish property prices are on the rise have been accompanied by forecasts of further gains. According to an analysis of Irish housing market data carried out by Economic and Social Research Institute (ESRI) economist David Duffy, residential property prices in Ireland will rise by an average of up to seven percent nationally and up to 10 percent in Dublin this year.
Speaking at last week’s launch of the Irish Banking Federation’s latest housing market monitor, Duffy said: “I think there will be a rise in house prices in the order of 5-7 percent nationally. Dublin will be 8-10 percent.” He added, however, that it was still “too soon” to say the Irish property market had “turned completely” after the steep crash of the past five years. “There are increasing signs of stability and some recovery but we need time to see if this is becoming embedded,” Duffy observed.
**Why Are Investors Buying Now?**
!m[Is it Time to Snap Up Irish Property?](/uploads/story/5085/thumbs/pic1_inline.jpg)
The significant drop in Irish property prices in the capital since the height of the boom, combined with greater access to finance and a forecast of growing values have all been credited with the recent increase in property investment demand in Ireland.
Estate agency Savills, which was involved in 40 percent of all Irish property deals last year, said it is getting 10 or more bidders on every transaction now, while many owners are reluctant to put their properties on the market because prices are low and also because lending conditions are difficult.
According to broker Karl Deeter thousands of people with mortgage approvals have been finding that Dublin prices are moving beyond the amount banks are prepared to lend them, thus sparking concerns that the shortage of supply could create a new housing price bubble in the Dublin area.
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