The latest CSO house price report has been released by the CSO.  What the data show is that “Residential property prices grew [nationally] by 0.2% in the month of May. In Dublin residential property prices rose by 0.2% in May but were 17.5% lower than a year ago. Dublin house prices increased by 0.5% in the month but were 17.7% lower compared to a year earlier. Dublin apartment prices were 16.3% lower when compared with the same month of 2011.  The price of residential properties in the Rest of Ireland (i.e. excluding Dublin) rose by 0.1% in May … Prices were 14.2% lower than in May 2011.

The piece of data that the media are likely to focus on is that Dublin houses have now not fallen for three months in a row, growing very marginally each month.  In other words, prices for Dublin houses seem to be potentially stablising.  Before we get ahead of ourselves my view would be that prices have to stabilise for at least 6-9 months before we can start to call the bottom as the market is still fragile and there have been other periods on the way down where it appeared to level off before then falling again.  Moreover, the year-on-year reduction is still large.  Dublin apartments still seem fragile – they have fallen the most from peak (61%), fell again last month after two months of not falling further.  Nationally, excluding Dublin, seems fragile still and one would expect prices to fall as much as Dublin prices in the long term given levels of oversupply outside the principal cities.  Dublin does have relatively normal levels of housing vacancy (4.9% according to Census 2011) but not apartments (18.6%), so it does seem supply/demand might be coming into line for houses (particularly in South Dublin where vacancy is 3.4%) but certainly not apartments.  There is oversupply of houses and apartments everywhere else, including the other cities.  It should also be noted that the CSO index does not including cash sales and is based on a relatively small number of transactions.

Basically what this means, is whilst the indications are positive for Dublin houses, we should be careful not to read too much into the data until we have a time-series of stabilisation, and the property market remains very fragile.

Rob Kitchin

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