CSO figures released today show that house price inflation has not gone away. Average prices in Dublin increased by 1.6% in April and are now 4.6% higher than they were 12 months ago. Furthermore price growth in Dublin has accelerated steadily over the first four months of the year.

Commenting on the figures Dr. John McCartney, Director of Research at Savills said;

“This is exactly what we predicted. Price growth slowed in Dublin last year as tighter mortgage lending forced people into renting. However, this slowdown was always going to be temporary; the shift to renting has forced up rents, attracting investors who are now scrapping to buy properties and driving up prices. As this continues the Dublin market may become increasingly like London with expensive properties, many of which are owned by investors.”

Outside Dublin the market is going in the opposite direction – prices fell in March and April and the annual rate of price inflation has slowed from 11.4% in January to 9.5% in April.

“With tighter mortgage lending introduced in February 2015, many people were priced out of the Dublin market and bought properties in Wicklow, Meath and Kildare. This drove strong price increases in those counties last year. But this has diminished their attractiveness, and increasingly, families are weighing up the cost savings against the longer commute and choosing to stay renting until they can assemble the deposit to buy in Dublin”.

Looking ahead, Savills says Dublin house price inflation will heat-up further in the coming months;

“The only thing preventing stronger inflation in today’s figures was the strong growth recorded 12 months ago. However, prices slowed sharply from last May, meaning that next month’s figures will be compared to a much weaker base. This will almost certainly result in faster house price inflation next month.”