Donegal house prices have risen by more than 11% at the end of 2016 in comparison to the previous year. The cost of a home is now 23% higher than its lowest point in 2013.
The latest Daft.ie quarterly report shows that house prices are on the up nationally. The average increase in Ireland was 8% in the final quarter of 2016, meaning that Donegal prices are rising more sharply.
The average house price in Donegal is now €139,630.
The asking price for a 3-bed semi-detached home in Donegal is up by 15% to €84,000, while a 4-bed bungalow averages at €166,000 – up by 6.7% compared to that period last year.
The report reveals a further fall in supply of housing in the region. There were fewer than 6,000 properties for sale in Connacht and Ulster in December, the lowest since January 2007, the first month of the series.
Actual prices are now reaching well beyond their asking price. The average transaction price in Connacht-Ulster is now 7% above the original list price. Prices had been in line with the list price a year ago.
House prices nationally have risen by 34%, or more than €56,000, on average since their lowest point in 2013.
The national average asking price in the final quarter of 2016 was €220,500, compared to €204,000 a year ago and €164,000 at its lowest point. At the peak of the boom, the average was €370,000.
Ronan Lyons, assistant professor of economics at Trinity College Dublin and the report’s author, said that such high increases may be the new normal, but normal does not mean healthy.
“We know that in a healthy housing system, any extra demand for more housing is offset by more supply – in other words, the real price of housing should be stable, once general inflation is taken account of. In Ireland, general inflation has effectively been zero not just over the last 12 months but indeed over the last decade,” Mr Lyons said.
“So Ireland is currently trapped in a situation where housing prices are increasing far faster than prices in the rest of the economy. This is not sustainable but the latest indications are that this high rate of inflation is embedded in the market, due to strong demand and weak supply,” he added.