Dublin Home Prices Are Falling Again

(Bloomberg) --

Some painful memories are beginning to stir in the heart of Dublin’s affluent south side.

When a five-bedroom, three-bathroom Edwardian home hit the market in September, the price was 2.5 million euros ($2.81 million). Today, the red-brick abode with a 80-foot long garden in the district of Dartry is on offer for 1.95 million euros, down by more than a fifth.

The cut reflects a wider slowdown in the Dublin housing market. The price of a typical three-bed semi-detached house dropped in the first quarter for the first time since 2015. And one agent compared the becalming of the market to the period just before it crashed in 2008, one of the worst in Irish history and a bust that ultimately forced the country to seek an international bailout.

The agent asked not to be named for fear of upsetting clients seeking to sell their homes, just as the latest boom runs out of steam. Since their 2012 low, prices have almost doubled, before leveling off in recent months. Annual price growth slowed to 1.9 percent in January from 13 percent in April, government figures show.

The price of a three-bed semi-detached house in Dublin city has dropped 1.7 percent since the end of December, realtor REA said this week. This amounts to a decline of about 7,500 euros, wiping out the average 7,000-euro gain in 2018.

“Time taken to reach sale agreed in Dublin is now eight weeks, double that of a year ago,” said REA spokesman Barry McDonald.

While homebuilders like Cairn Homes Plc and Glenveagh Properties Plc remain upbeat, investors are less sure. Shares in Cairn have dropped 22 percent since the middle of July, while Glenveagh is down 27 percent.

A number of factors seem to be at work. First, concerns around the U.K.’s exit from the European Union are taking a toll. A no-deal Brexit could cost Ireland 50,000 jobs, Finance Minister Paschal Donohoe warned this week.

Lending Rules

The slowdown may also reflect tougher mortgage lending rules imposed by the central bank. The volume of mortgage approvals fell in January compared with a year earlier, according to Banking & Payments Federation Ireland, though figures released Thursday showed a recovery, rising 7 percent in February.

After years where few houses were built in the wake of the crash, supply is finally catching up, according to John McCartney, head of research at Savills Plc Irish unit. About 18,000 homes were built in the country last year. While still behind the 25,000 homes that the government has estimated are needed per year, the gap is narrowing, McCartney said.

“There are numerous estimates of how many new homes are needed, but demand may well have peaked,” he said. McCartney estimates 35,000 homes a year are required.

Prices may be coming back to reflect affordability. Values “are more reflective of what’s going on in the underlying economy, they are being driven more by fundamentals prices rather than maybe in the past,” said Kieran McQuinn, an economist with the ESRI think-tank in Dublin.

Back in Dartry, Paul Murgatroyd, director of research at Douglas Newman Good Ltd., which is selling the house, is confident the house could be sold sooner rather than later.

“The interest may not have been there before, but there is good interest now,” he said. “So it seems to have found its level.”

To contact the reporter on this story: Peter Flanagan in Dublin at pflanagan23@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Dara Doyle, Rodney Jefferson

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