House price growth in Dublin continues to slow as increased stock and the unwinding of Covid-related demand feed through into the market, according to DNG. The estate agent also pointed to the dampening effect of rising interest rates.
The company’s latest house price gauge suggested the average price of a resale property in the capital increased by 6.4 per cent in the year to September, down from a rate of increase of nearly 10 per cent a year ago. The quarter-on-quarter rise in prices was just 0.4 per cent, the lowest level of increase in almost two years. DNG chief executive Keith Lowe predicted the headline rate of growth could fall to just 2 per cent next year.
“One factor driving the stabilisation in prices is the increase in supply in the second-hand market, with 25 per cent more resale properties available to buy now in Dublin compared to a year ago,” he said.
“This is undoubtedly being driven in part by the continued sell-off of buy-to-let properties as landlords continue to leave the rental market,” Mr Lowe said, noting small landlords are selling because of the tax regime, which when PRSI and USC are factored in, along with management charges, property tax and other associated costs, makes many lettings “economically unviable”.
He predicted a further moderation in price growth next year — down to 2-3 per cent — considering “the current inflation and interest rate headwinds that exist”.
DNG’s latest report also detected a price slowing trend in the capital’s apartment market with the average price of an apartment in the year to September growing by 4.4 per cent, down from a rate of 7.4 per cent a year ago.
The agent said north Dublin saw an above average rate of price growth during the third quarter, with house prices increasing by 1.2 per cent and apartment prices increasing by 1.1 per cent respectively over the period. DNG cited relatively more affordable property prices north of the city centre, and the proposed MetroLink rail project as reasons behind the greater than average price growth.
“In line with our forecast earlier in the year, the rate at which residential property prices in the capital are increasing continues to ease, with the DNG house price gauge recording a modest increase in prices in the third quarter which is welcome news for buyers,” DNG’s director of research Paul Murgatroyd said.
“Increased stock available on the market this autumn, Covid-related pent up demand unwinding, and rising interest rates are all serving to reduce the rate at which residential property prices are increasing across the capital,” he said.
Mr Murgatroyd also noted that the “residential transaction levels conducted by the agency were very strong in recent months, running 13 per cent ahead of the same period last year”.
Mr Lowe said: “It is welcome to see property prices in the capital stabilising this quarter, as the level of house price inflation seen in the market in recent years was clearly unsustainable. Overall, prices are projected to finish up around 6 per cent higher this year than they were at the end of last year.”
On the continued exodus of small landlords, he said: “Our analysis shows that outside Dublin, almost 30 per cent of all houses currently advertised for sale throughout our nationwide network are former buy-to-let properties, whilst in Dublin the figure is 23 per cent.”
“This is putting further pressure on the rental sector, as the majority of rental properties being currently sold are subject to rent caps and let below market rent levels,” he said.