House prices defy interest rate rises with 15.4% growth
Interest rate rises have yet to significantly slow the housing market with prices last month showing a 15.4 per cent increase on July 2005.
The monthly house price index, compiled by the Economic and Social Research Institute (ESRI) and Permanent TSB, said this rate was up on the 15.2 per cent annual growth rate recorded in June and continues a trend that has been rising since last October.
The average price of a house nationally in July was â‚¬303,274, â‚¬25,000 more than at the end of last year. In Dublin, the average home now costs â‚¬408,959. This time last year, it was just over â‚¬350,000.
Prices have continued to rise this year despite four quarter-point increases in interest rates, most recently early this month. The European Central Bank (ECB) is expected to increase rates by a further half percentage point before the end of the year.
Permanent TSB pointed to the fact that the 1.1 per cent rise in prices last month was down on the monthly increases in May and June. However, the monthly rises this summer are all higher than in the same period last year and the annual rate of increase, at 15.4 per cent, is more than twice the annualised growth rate of 6.2 per cent recorded in July 2005.
Permanent TSB conceded that the rate of growth in prices so far this year of 9.1 per cent was still higher than expected.
A spokesman said the full impact of recent interest rate rises may still not be feeding through to the figures, which reflect the drawing down of mortgage loans, not their approval. “It may be a couple of months yet before the full impact of the most recent rate rises show up in the figures,” he said.
Homeowners with a mortgage of â‚¬250,000 over 25 years are now paying an extra â‚¬134 in monthly repayments compared to last December, just before the ECB made its first interest rate hike in more than five years.
Property in the commuter counties of Meath, Kildare, Wicklow and Louth has seen the most dramatic rise in prices over the past year, jumping by 18.6 per cent - or more than four times faster than in the previous year.
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