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Property prices hit ceiling as loan limits cool market

  • Capital cools: Second quarter of price declines seen in Dublin
  • Regional slowdown: Prices still rise but less quickly, says report

Marian Finnegan, chief economist at Sherry Fitzgerald. Photo: Doug O'Connor
Marian Finnegan, chief economist at Sherry Fitzgerald. Photo: Doug O’Connor
(Stock photo)

Property prices have hit a ceiling as lending limits restrict the pace of growth. The capital city in particular has seen a sharp moderation in prices, after experiencing such a heated property market in recent years.

Estate agency Sherry FitzGerald revealed that prices in the capital were again down in the first three months of the year in the capital, the second consecutive quarter of decline.

As the capital cools, property prices are still rising to varying degrees in the regions – but here, too, the pace is slowing down since last year.

The Government is known to be banking on prices easing ahead of the next election.

It is understood it realises that the perception of cuckoo funds edging young couples out of the market as they block-buy housing units has the potential to do it huge damage at the polls.

In the latest update on the residential property market, Sherry FitzGerald economist Marian Finnegan said: “Price growth remained almost flat in the opening months. Tighter lending conditions remain a restraint on price growth, particularly at the upper end of the market, while Dublin continues to feel this restriction more than anywhere else.”

Compared with last year, prices in the capital city were up just 0.8pc in the first three months of the year, the estate agency said.

Prices are rising faster in the rest of the country, but not at the rate they were in the past few years.

Outside the capital, prices were up 0.7pc in the first three months of the year, and by 3.4pc over the past year.

And rental pressure remains acute in Dublin and nationally.

The average standardised rent was €1,134 at the end of March, up 6.9pc.

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Dublin house prices have hit a plateau as lending limits restrict price growth.

The capital city, which experienced such a heated property market in recent years, has seen a sharp moderation in prices.

Estate agency Sherry FitzGerald revealed that prices in the capital were again down in the first three months of the year in the capital, the second consecutive quarter of declines.

As the capital cools, property prices are rising to varying degrees in the regions – but here too, the pace is slowing down since last year.

The Government is known to be banking on prices easing off ahead of the next election.

It is understood it realises that the perception of cuckoo funds edging young couples out of the market as they block-buy housing units has the potential to do it huge damage.

Slower price growth is a continuation of the trend seen near the end of last year, the estate agency said.

In the latest update on the residential property market, Sherry FitzGerald economist Marian Finnegan said: “Price growth remained almost flat in the opening months.

“Tighter lending conditions remain a restraint on price growth, particularly at the upper end of the market, while Dublin continues to feel this restriction more than anywhere else.”

The findings are consistent with those of the CSO which found that in the month of February prices fell by 0.1pc. It was the fourth month in a row of price drop.

On an annualised basis prices are still rising, the CSO said, but at a slower pace. Lending limits mean buyers cannot borrow more than three-and-a-half times their income, with first-time buyers needing a deposit of at least 10pc.

Compared with last year, prices in the capital city were up just 0.8pc in the first three months of the year, the estate agency said.

Prices are rising faster in the rest of the country, but not at the rate they were in the past few years.

But outside the capital, prices were up 0.7pc in the first three months of the year, and by 3.4pc over the past year.

Second-hand homes saw their values increase by 0.2pc in the first quarter.

More homes are being built, with planning permissions granted rising. But the large increase in construction activity is coming from a low base.

And rental pressure remains acute in Dublin and nationally.

The average standardised rent was €1,134 at the end of March, up 6.9pc.

The Government is known to be hugely concerned about high property prices and rents.

Unless it is seen to get to grips with the crisis there are expectations that “Generation Rent” will make Government TDs suffer at the ballot box.

People are being forced to pay rents that are now €300 a month higher than during the property market peak in 2008, with many forced to give up their homes as landlords push up rents to levels that have become unaffordable.

A United Nations special rapporteur on housing has already raised the stakes by condemning what she said was the “financialisation of housing” in this country.

Fearful of further backlashes, the Government is to review what the UN referred to as the “preferential tax arrangements” of big funds investing in housing here. They are block-buying homes, muscling families out of the market.

Irish Independent

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