Statement by Marian Finnegan, Chief Economist, Sherry FitzGerald Group Tuesday, January 3rd, 2017
Sherry FitzGerald, Ireland’s largest estate agents, announced today (Tuesday) that the average value of residential property in Ireland rose by 1.2% in the fourth quarter of 2016, bringing growth in the year to 5.2%. This represents a moderate increase on the 4.0% recorded in 2015. The Dublin market saw prices increase by 3.7% over the course of 2016, compared to 1.4% in 2015.
When Dublin is excluded from the national figure, the annual growth figure stood at 7.3% in the twelve months to end December 2016. This growth rate was just slightly lower than the 7.6% recorded in 2015. The regional centres of Cork, Galway and Limerick saw growth of 7.4%, 10.1% and 6.9% respectively in the twelve-month period.
Commenting on the results Marian Finnegan, Chief Economist, Sherry FitzGerald Group said; “The combination of the strengthening demand and limited supply has placed upward pressure on prices. This is most noticeable in rural Ireland with counties like Donegal, Offaly, Roscommon, Westmeath and Wexford all experiencing double digit growth. That said, it should be noted that average values still remain approximately 40% off peak 2006 levels.”
Commenting further on the market Ms Finnegan said; “There is no doubt that 2016 was a turning point for the residential market. Ten years after the crash began, the announcement of the Government’s Action Plan for Housing and Homelessness during the summer of 2016 provided a vision for housing, together with a clear strategy on how the vision will be achieved. The combination of this strategy and the revised macro prudential policy and the initiative for first time buyers launched in the Budget will all serve to assist the market in its recovery.”
Continuing Ms Finnegan said; “However, despite the considerable progress made earlier in the year to restore confidence in the construction sector, the announcement of the Government’s plan for the rental sector in December was disappointing. There is undoubtedly clear evidence that current levels of rental inflation are a direct market response to inadequate supply levels and yet the Government plan does not address this at all. Instead it focussed on capping rental inflation to 4% in key urban areas. This short-term approach was particularly disappointing as rental levels are now exceeding previous peaks in many urban centres”
Notably, the trend of investors selling out of the market continued throughout 2016 as 32% of properties traded through Sherry FitzGerald Group were vendors selling investment properties while a further 11% were repossessed properties, which were largely buy to let properties. In contrast, only 20% of purchasers were investors.
The latest data available from the Property Price Register (PPR) reveals that approximately 34,000 residential units transacted in Ireland during the opening nine months of 2016. When you exclude multi-family/portfolio sales, this figure reduces to approximately 32,150, of which approximately 10,200 sales were in Dublin. Excluding multi-family activity, residential sales activity saw little change compared to the same period in 2015, with only a 1% increase recorded nationally in the first nine months. In Dublin, transactions increased by 5%.
A comparison between mortgage drawdown data by the Banking and Payments Federation Ireland (BPFI) and the Property Price Register (PPR) suggests that cash purchasers were responsible for 46% of all residential transactions in the first nine months of 2016.
Approximately 3,900 new residential units were sold in the first nine months of the year, compared to 3,400 in the same period in 2015. Notably 1,460 were located in Dublin compared to less than 1,000 in 2015. It is also worth noting that the average value of a new unit sold in 2016 was 18% higher than the comparable figure for 2015.
Looking to the year ahead, there is growing optimism that the measures introduced during 2016 to increase supply will be effective. However, at this juncture there is no apparent solution to the lettings crisis. As such, this is likely to be the focus of much debate in the months ahead.
For any further information, please contact:
Director of Communication
Sherry FitzGerald Group
Ph: 01 237 6500 / 086 252 3277
Sherry FitzGerald Group
Ph: 01 237 6341 / 086 814 8251
Note to Editors:
1) Founded in 1982, Sherry FitzGerald has grown to become Ireland’s largest firm of estate agents with over 90 owned and franchised branches throughout Ireland.
2) The Sherry FitzGerald barometer of second-hand house prices is the longest established index of price performance in the Irish residential market. Originally established in 1992 the barometer provides a quarterly analysis of price trends in the Irish and Dublin second-hand residential market.