First-home grants and looser lending rules to fuel 'double-digit' house price rises this year

Property price inflation began to speed up again at the end of last year.

By Paul O'Donoghue

IRISH PROPERTY PRICE inflation sped up late last year – and the trend is expected to continue after the loosening of the Central Bank’s mortgage lending rules and the introduction of the government’s first-time buyer scheme.

According to the CSO’s latest Residential Property Price Index, house prices rose by 1.5% across Ireland in November. In the year to the end of the month, residential property prices increased by 8.6%, compared to an increase of 6.9% in the year to October.

The jump was most pronounced outside the capital. In Dublin, residential property prices increased by 5.9% in the year to November. Prices in the rest of Ireland, excluding Dublin, were 12.8% higher during the same period.

Davy analysts said that there is now a real possibility that house prices will rise by more than 10% across the country in 2017.

property index nov 16 House price growth
Source: CSO Ireland

Double-digit inflation

In a note published this morning, Davy chief economist Conall Mac Coille said with house price inflation “now in double-digit territory across most regions of Ireland, a gain exceeding 10% in 2017 now looks like a distinct possibility”.

“Ireland’s tight housing market and robust economic recovery are already driving sharp price rises, with the government’s help-to-buy scheme and looser Central Bank lending rules likely to further stimulate house price inflation in 2017,” he said.

The help-to-buy scheme, which was announced by the government during Budget 2017, will give first-time buyers a grant that could be worth as much as €20,000.

Shortly afterwards, the Central Bank announced that it would ease the deposit requirements for first-time buyers saving for more-expensive properties.

Buyers previously needed to save deposits worth up to 20% of the purchase price, but they will now only need to come up with 10% to put towards their purchases.


Mac Coille said that Irish house price inflation “has accelerated significantly with prices up by an enormous 1.5% on the month”.

“This all comes ahead of the government’s help-to-buy scheme and the loosening of the Central Bank mortgage lending rules – which will surely push price inflation higher still next year,” he said.

“We had forecast an 8% house price gain next year, but today’s data suggest double-digit house price inflation in 2017 is a distinct possibility.”

The Central Statistics Office property price index, which is based on Revenue stamp duty returns, found that the found that the national index remains 31.5% below its highest level in 2007.