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Newstalk

14.42 12 Sep 2017


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A new report shows the annual rate of Irish house price inflation accelerated to 12.3% in July.

KBC Bank says this is its fastest pace in two years.

It says this was led by the largest monthly rise in Dublin property prices since July 2014 - up 2.7%.

Dublin house price inflation is now outpacing that in the rest of Ireland for the first time in two years.

Source: KBC

The report says the pick-up in Dublin price inflation "reflects the increasing intensity of the demand/supply imbalance in the capital of late."

Growth in the number of Dublin residential property transactions outpaced the increase in prices through the second half of 2016.

But the increase has slowed even as the pace of increase in prices has picked up.

KBC says this highlights an increasing shortfall in supply relative to notably strengthening demand.

Source: KBC Bank

In contrast, the trend in transactions outside the capital has shown a more consistent if modest growth.

"This has translated into a steadier if still strong pace of property price inflation outside Dublin", KBC adds.

"The current momentum in house price inflation is stronger than might have been envisaged and reflects the strength of pent-up demand now emerging in the face of a very limited increase in new supply."

"This surge should eventually ease but this process could take a year or more.

"We would also expect new supply to expand somewhat faster in the next year or two but this is unlikely to match prospective demand."

However there are also some indications that suggest an eventual slowdown in inflation - such as a recent drop in the rate of increase in new mortgage approvals and in the average loan size approved.


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