House prices across rural Ireland have increased by a higher percentage than Dublin for the second year in a row, however, the median price difference still remains roughly €120,000 new CSO figures have shown. In recent months, the price increase has slowed down, but there is still a marked increase in prices in rural locations.
Median difference remains at €120,000
This might suggest that the price gap was closing but this is not the case.
The reports suggest that the Central Banks mortgage lending cap has forced buyers further afield in search of the more affordable property. Slowing down growth at the top end while increasing growth further afield.
The RTE report continued by showing that in 2016 the median price for a property in Ireland was €190,000. The median price for a property in Dublin was €310,000; a €120,000 premium.
Continuing into 2018 the average property nationally costs €248,000, while a Dublin property costs €368,000.
The €120,000 premium remains.
Why has this continued well if you take a 10% price rise on a €250,000 property costs the same in real money as a 5% price rise on a €500,000 property?
In order to close the gap, property prices throughout the country would have to see a huge increase in Prices. This is simply is not happening even in neighbouring counties such as Kildare, Wicklow and Meath.
Supply and Demand
Why might this be
As Ireland has emerged from its economic recession professional have been flocking the business centres such as Cork, Dublin and Galway but supply has fallen far short.
In an effort to reduce the risk of further economic issues construction all but halted across the country in the years during the recession. Now, it is struggling to reach demand placing additional strain on those searching for their first home or to rent.
The Financial Times conducted a piece this week in which they looked at the difficulties in the rental and construction sector.
With Dublin average rent reaching €1600 per month it seems that the upward trend will only continue as properties are snapped up as soon as they come on the market.
This has resulted in the emergence of professional renting bodies who are purchasing entire builds in order to reach rental demands. Placing
In lieu of this demand, some companies have taken it upon themselves to secure short term rental properties for the employees especially in the Dublin Docklands regions.
As the so-called silicon docks continue to expand, securing the right employees and accommodation for them is becoming a priority for some companies.
Construction Industry issues
This has increased pressure on the government to increase housing construction and availability something which has been dogging the government in recent months.
To top it off, skills and labour shortage in the building industry are also hampering the construction of homes and projects across the capital with the most prominent issue being the construction of the National Children’s hospital.
Cost have skyrocketed due to unforeseen material and labour costs as industry inflation have seen work prices ballon across the country.
Possibly a Silver lining?
But some industry professionals have seen the recent CSO figures as a positive sign in the wake of these issues. With the most recent announcements that although prices have continued rise, it has slowed down.
This is possibly showing that supply is catching up on demand reducing pressure on rental and property prices. Though it is still far too early to say if this will have any real impact.
Cantor Fitzgerald’s Alan McQuaid said supply continued to be the key issue, with new supply still not enough to satisfy demand in the short to medium term. “First-time buyers continue to be priced out of the market. Subsidising purchasers through tax breaks is not the answer. But at least, new supply is coming on stream. Last year a total of 18,072 new dwellings were completed, a 25 per cent increase on 2017, and this is forecast to rise to around 23,000 in 2019, but still below the estimated figure of 35,000 per annum needed to meet demand in the short-to-medium-term,” reported the Irish Times.
So the CSO reports have been met with conflicting views form some professionals but what we do know is, prices are still rising. Not the News new renters or first time buyers want to hear of course.