National property prices up 15 per cent in 12 months

Property transactions are up by 42.8pc across the country in the past year while house price increases in Dublin are having an impact on driving up rents and putting pressure on social housing.

That’s according to Property Industry Ireland (PII), the organisation representing businesses working in the Irish property sector, who told the Oireachtas Environment Committee that it is increasingly worried over supply and demand imbalances in the housing market.

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The statement comes after CSO figures today showed a near 15pc annual rise in home prices nationally and a 25pc increase in the Dublin area.

Responding to today’s CSO figures, PII Director said: “While today’s continued house-price growth will help some people out of negative equity, this continued price growth, coupled with an increased number of transactions, will undoubtedly lead to further pressure on rents and increased demand for social housing, where there is already a huge shortage. The three sectors of the property market are inter-connected, and it is not surprising that we are seeing increased homelessness and shortages of local authority housing at the same time as price increases.”

“By increasing supply of quality houses and apartments in areas of high demand such as Dublin where prices rose by 25pc over the last year,we can relieve pressure on rents and ease demands for emergency social housing,” he added.

He told the Dail committee that improving supply to the market will calm the market and will provide security to those who own houses and confidence to those who wish to own houses. It is the easiest way of controlling rents.

“Development of new houses, however, will not happen while the cost of construction and development is higher than the market price of the house. That is why, despite the growth in prices in some areas, there are still no cranes on the skyline. Two options are open to us: we can allow prices to rise or we can tackle the non-construction cost of development. VAT at 13.5pc, the windfall tax on profits from rezoned land at 80pc, and high local development charges all add to the cost of development and mean that in many parts of Ireland, commencing new buildings, despite any increased demand, is not yet viable.”