There are just 3,000 properties for sale in Dublin at present, which is a 30% decrease in the amount of properties for sale from the same time last year. The shortage of supply of properties in Dublin is resulting in increases in completion prices, even though the selling price might be overinflated due to this shortage of stock.
The increase in property prices in Dublin is quite different to the rest of the country, where property prices in some counties continue to fall however there is some activity in cities such as Cork and Galway. The divide between property asking prices in Dublin and the rest of the country is now at 28%, according to a study carried out by the property website Myhome.ie. This divide has increased by 11%, up from 17% last year. This is reflective of the amount of transactions in Dublin versus the rest of the country. Over a third of all property transactions in the first 9 months of 2013 were in Dublin.
The shortage of suitable houses will continue to result in rises in property prices. It would appear that developers are reluctant or possibly unable to build new properties and this could be due to a number of factors, such as lack of finance from banks or profit return being too low.
The banks will also play a key role in property prices. A recent report shows that the number of mortgages and the amount of lending to home buyers fell in the fourth quarter of 2013, compared to the same period in 2012. Mortgage lending is now at levels not seen since the early 1970’s. Cash buyers are now a significant percentage of property purchasers and a large portion of this group appear to be foreign investors.
In the news recently, it has been proposed that a punitive tax should be placed on development land held by developers with a view to forcing the hands of developers to commence building new homes again. This will result in increased supply of property however it will be a number of years before these new properties reach the market. Hopefully a scheme like this will incentivise developers to build new homes again, which should result in property prices finding their real value.
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