House price inflation should remain strong in 2017 despite the likely abolition of the ‘Help-to-Buy’ scheme according to the latest property report from MyHome.ie in association with Davy.
The mix-adjusted price on newly listed properties nationally rose by 5% in Q2 up 8.9% on the year.
In Dublin prices rose by 2.8% and are up 10.3% year on year. Newly listed properties are seen as the most reliable indicator of future price movements.
The mix adjusted asking price for new sales nationally is now €251,500, an increase of over €24,000 in the last six months. The corresponding figure for Dublin is €360,000 an increase of €32,000.
One trend in the report has been a strong ‘catch up’ in areas where the recovery in house prices began later.
In Tipperary this was most evident in the prices of 4 bed semis which rose by 6.7% in Q2 to €160K and are up 6.9% year on year.
The price of 3 bed semis in the county rose by a more modest 2% to €135K, a 4% increase year on year.
While house prices are still 40% below peak levels, these increases bring prices back to the level they were at in early 2013.
The author of the report, Conall MacCoille, Chief Economist at Davy, said house price inflation should remain strong despite the likely abolition of the ‘Help-to-Buy’ scheme in the upcoming Budget. While acknowledging that 5% was another sharp increase he pointed out that prices do tend to fall back after the busy summer.
The outlook for Irish house price inflation will be primarily driven by robust jobs growth, rising incomes and competition among homebuyers, leading to more highly leveraged mortgage lending.
The likely demise of ‘Help-to-Buy’ could lead to a rush of transactions in 2017 as first-time buyers move quickly to avail of the scheme and to a slowdown in 2018 as it is phased out.
Nonetheless, the bigger picture is that Irish house price inflation should remain robust, driven by the recovering economy.”
MacCoille believes that ‘Help-to-Buy’ has had a significant impact on the housing market.
“The 1,679 ‘Help-to-Buy’ claims approved to date have cost €24.5m. This means that the average ‘Help-to-Buy’ cash rebate has equalled €15,000, or 5% of a €300K newly built home. Given the 7,275 applications received so far, the initial estimate that the scheme would cost €50m may now seem conservative.”