House prices are set to keep rising this year despite the Central Bank plans to restrict mortgage lending.
The rise in prices trend is continuing especially in Dublin and other surrounding urban areas. There is still a demand for properties to live in which coincides with Ireland’s Economic Growth.
Supply of properties to buy still remains a problem, but the prices will grow this year. “We have every reason to believe that prices will continue to rise at above trend levels in the short term in many locations, especially in the capital and the surrounding commuting areas,” Keane Thompson’s Jana Keane said.
But she said that the plans this month by the Central Bank to limit mortgage lending meant there was uncertainty about how the property market would perform, “We have been inundated with enquiries on the new mortgage plans and how they will affect the sale or purchase of our clients properties”.
The Central Bank has proposed bringing in new rules that would force most home buyers to have a 20pc deposit on the property, the amount lent would also be limited to three-and-a-half times salary for the majority of buyers, under proposals outlined before Christmas, which we covered here.
Central Bank currently reviewing their proposed mortgage plans
The Central Bank is currently assessing submissions on the proposals and is due to announce this month whether the rules will be outlined as initially proposed. Most commentators like ourselves at Keane Thompson expect the new rules to be watered down, and expect there will be a phasing in of the new lending restrictions.
Last year house prices rose by 16.3% nationwide, with Dublin experiencing an 18% rise in prices. Residential property outside Dublin was up 14%. Cork prices were up by 18%, with prices rising 14.5% in Galway, and 12% higher in Limerick.
Activity levels increased in Ireland, where 40,000 properties sold nationally last year, a rise of 33% in activity levels on the previous year, with about 14,000 of these transactions occurring in Dublin.
It will be some time before the mismatch between demand and supply is balanced, and it will take a while before the market finally stabilises.