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Residential property prices in Ireland increased nationwide by 0.5% in May and are 13.8% higher than they were a year ago, but fall slightly in Dublin. The latest data from the Central Statistics Office also show that prices are still some 37.5% lower than at the peak of the market in 2007. A breakdown of the figures show that in Dublin, which has been leading the real estate recovery prices actually fell by 0.1% in May but Dublin residential property prices are 15.2% higher than in May 2014. Dublin house prices fell by 0.2% in May whilst Dublin apartment prices rose by 0.4%. However, a CSO spokesman said that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. Outside of Dublin residential property prices rose by 1.1% in May and prices were up 11.9% compared with May 2014. Dublin property prices are now 38.1% lower than their 2007 peak with house prices 36.4% lower and apartment prices 41.9% lower. Outside of Dublin residential property prices were 40.8% lower than their highest level in 2007. But prices are expected to continue rising. According to Savills Ireland a 9.6% increase in Dublin rents over the last year, make further house price increases inevitable. Savills director of research, John McCartney, believes that a simultaneous increase in rents has limited any decline in residential yields. ‘While deposit rates have fallen by 28% since the end of 2012, property yields have held up better due to rental growth. This relative swing has diverted money into bricks and mortar, and this will continue,’ he said. According to Savills, investment activity will remain focused on Dublin where yields are particularly attractive. ‘Normally you expect riskier, less prime assets to deliver a higher income return. However a quirk of the current market is that average yields are higher in Dublin than elsewhere in the country. In part this reflects the fact that Dublin rents are rising so strongly,’ explained McCartney. ‘But it also reflects the fact that prices fell more steeply in Dublin during the crash, and they still haven’t fully bounced back,’ he added. McCartney pointed out that Dublin house prices would need to rise by a minimum of 12% to restore the natural pecking order in residential yields. And, with attractive rental returns, investor demand will be a key driver of this price growth. Continue reading →

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