Housing price rises has the market all shook up

Housing price rises has the market all shook up

In the immortal words of Elvis Presley, “we’re caught in a trap”.

And you could be forgiven for having a suspicious mind as to where the current property market is going.

Yesterday’s latest residential property price index from the CSO revealed that prices had risen by 7.3% for the year to September.

While in the past Dublin and the major urban areas have been driving such increases the issue of rising prices is now widespread. Digging deeper into the latest figures revealed prices were up 15% in the Midlands and 12% in the west of the country, with the average price for a property nationally now €235,000 and €383,000 in the capital.

While current prices are still 33.1% off their peak of around a decade ago, many people fear that another bubble may already be upon us.

Already experts are predicting that prices are set to rise further and it’s difficult to counter that given the fact that demand still far outweighs supply.

Turning things around from here will be difficult though in a market where €9.2 billion has been spent on property so far in 2016 according to stockbroking firm, Davy.

The high rents that are being asked for around the country are attracting more investors into the market, with data from estate agents Savills revealing that 29.1% of all houses bought in Dublin in the last year were by investors.

The fact investors now make up almost a third of an already small and saturated market is putting even more of a squeeze on regular purchasers though, in particular first-time buyers.

Leaving aside the fact that they are finding it increasingly difficult to meet the deposit rules set down by the Central Bank due to the rising cost of homes, those who are successful in buying are taking on higher levels of debt because homes are now much dearer than they were when those very rules were introduced.

Indeed, the average asking price for a house nationally is now €15,000 above the €220,000 window whereby a 10% deposit is required from a first-time buyer.

We’re caught in a trap at present, or at the very least a vicious circle. People are renting because they cannot afford to buy but they cannot afford to buy because they are renting.

What it has resorted to is that people are back to buying off plans.

Most recently Cairn Homes sold 40 houses in the Marianella development in Rathgar off plans, taking in €27.2 million in the process. That worked out at an average price of €650,000 – a figure beyond most buyers.

Another Elvis song “If I Can Dream” is currently being used by the National Lottery in their adverts for their various draws. The way the market is at present and the way it is going, a dream is all home ownership will be to many people for some time to come.

Let us know your views on the matter.

  • Are house prices becoming unaffordable again for the average person?
  • Are you struggling to save for a deposit because of high rents?
  • How much higher do you anticipate prices going in the next 12 months?

Have your say below…

There are 9 comments for this article
  1. Mary C at 3:19 pm

    Its the first time buyers who are married to non first time buyers that are really being punished

  2. Jacob (@kosogun) at 4:30 pm

    I think people should stop blaming the government.
    The government cannot win no matter what they do – I have my own grievances with this government – they are hurting me in many ways. However we should start taking responsibility for ourselves.
    When they refuse to increase support for housing allowance they were blamed by some vested interest and do gooders, now that they have done so and people on housing support (especially those who are gaming the system) are now displaying those who are working, it is another noise.
    I think the government should completely leave the housing sector at this point and let water find its level and let everyone take control of their destiny.
    If people cannot buy at the current price, let them come together and start forming co-operative/housing association and work together to save and raise funds. Let them look for alternative location and not Dublin to build, but if everybody wants to live in Dublin and buy a house immediately after getting out of college or because they have started family it will not work.
    There are cheaper alternatives to the current Rolls Roy house allowed by the current housing standards, which is costing fortune to build. Let start thinking outside the box.
    We should also stop blaming investor – we are not in a communist country. If the investors does not invest in the property or rental sector the issue will be more serious than it is.
    Government does not have unlimited fund to build a house for everybody, provide social welfare, provide free health for everybody. Saudi Arabia cannot afford to do so neither can Russia/China or Vietnam. Our expectations are just too high – we would soon be blaming the government for not having a car to drive around – this is mad and annoying.
    Asking Central bank to change the rules (Which they have done) will only compound the problem.
    In the first instance the rule is another meddling, it should be the responsibility of banks and those providing fund to ensure that they lend prudently.
    All meddling should stop and all aspirations should be tempered with some sensibility/reality – until that is done and all the stupid megaphone economics coming from the media stops, noting will work
    Housing market has a cycle, takes time to adjust and meddling can only complicate issue.
    Let’s face reality!

    • aidan conway at 4:09 pm

      Your tight about the government should leave the housing market to work itself out.
      However I have to disagree with your comment that we build Rolls Royce housing …our standards are far from good enough. Developers shouldn’t decide on the minimum standard of work look at the junk hosing we have in this country.
      The sooner we push fir higher standards the sooner it becomes the nnirm we need to enforce the regs properly and improve energy efficient cy and quality for the long term

    • Benny O’Reiiy at 4:47 pm

      I say your spot well put,

    • JD at 10:35 pm

      This comment
      There are cheaper alternatives to the current Rolls Ro[ce]y house allowed by the current housing standards, which is costing fortune to build

      So we got rid of bed-sits because they were not good. The question is who lived in them. Single men. Who are now sleeping on the streets? Single men.

  3. Seán at 6:20 pm

    The central bank rules are geared to allowing those with money to make more and those struggling to pay high rents destined to be stuck paying even higher rents to investors. What a plan!!! Meanwhile the government who should be building houses are sitting on their hands. Where is the vision?

  4. Liana at 1:15 pm

    “The fact investors now make up almost a third of an already small and saturated market is putting even more of a squeeze on regular purchasers ”

    That’s your answer right there

    • John Joseph McDermott at 4:20 pm

      It was the same during the last Ponzi style property boom.Investors are competing with ordinary buyers because they have money and nowhere else to make more,what with zero interest rates etc. Only the rich and well paid are buying property alongside the investors.
      Perhaps our young people will foment revolution because nobody else seems to care about the new,perfect storm which is hitting the property market and enriching unregulated vulture fund investors from foreign shores thereby depleting the tax base further.
      A small landlord is screwed and the big guy is riding high and raping the country all over again.!

  5. Thomas Wilson at 12:37 pm

    Start building Quality Medium rise Apartments in Dublin with decent recreation areas for families.
    As it’s an emergency situation compulsory purchase for all lands sitting idle required for these builds.

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