House Prices are Rising in the Country
Why are house prices continuing to rise in counties outside of Dublin?
Economists have said that the rise was as a result of first-time buyers rushing to get into the property market before the New Year. House prices are rising due to the new regulations, which have been enforced by the Central Bank. These regulations state that first time buyers can borrow 90% of the property price if the cost of the property is €220,000. If the price is above that, the 80% borrowing cost will apply. Non first time buyers can borrow 80% of the property price, and provide the bank with a 20% deposit. People will only be allowed to borrow loans of 3.5 times their income.
The increase of house prices has forced people to move to counties outside of Dublin. House prices in Dublin’s hinterland such as Meath, Kildare and Wicklow are also soaring. A recent Daft.ie report states that the first three months of 2015 showed that house prices outside of Dublin had increased, but Dublin didn’t have a big increase. Prices in Dublin have risen 2.9 % since the end of 2014, while counties outside of Dublin have increased by 5.9 %. Cork showed a growth of 7.2 %, Galway rose by 6.8 % and Limerick by 6.7 %. Cities around the rest of the country grew by 5.8 %.
Ronan Lyons, Assistant Professor of Economics at Trinity College said;
‘What we were seeing in 2013 and 2014 was rapid growth in Dublin and that’s not reached a limit because of the new mortgage caps but it has pushed outside Dublin now’. ‘It’s what people have to do if there isn’t the accommodation at the prices they can afford in the city but it’s not necessarily a saving because why did they want to be back in the city in the first place? They wanted to be there for jobs and other facilities and given that they can’t they say ‘well I will just have to spend more of my money on fuel.’ ‘If you survey people about time use, among the least enjoyable ways people spend their time is commuting.’
Mr Lyons continued by saying the prices of houses will stabilize towards the end of 2015 due to the last of the mortgages being approved by the new Central Bank.
In this writer’s opinion, the continuous soaring of house prices are partially due to the new mortgage regulations which have been implemented by the Central Bank. I think the Central Bank hoped that by administering these regulations it would reduce the risk of house prices from increasing in the future. However this has caused the buyer to have to commute from outside the city for hours on end and using up their money on petrol to get to their work. Perhaps, the property prices will stabilize in the future, but presently I think it is ridiculous to think that a person has to pay so much on their mortgage when they don’t even have their desired facilities locally.
