Statement by Marian Finnegan, Chief Economist, Sherry FitzGerald Group, Sherry FitzGerald House Price Index and Supply Side Analysis Thursday, March 30th, 2017
Sherry FitzGerald, Ireland’s largest estate agents, announced today (Thursday) that the average value of residential property in Ireland rose by 1.9% during the first quarter of 2017. This compares to a lower rate of 1.3% recorded in the same period in 2016.
In Dublin, the average value of residential property rose by 1.8% in the first quarter of 2017, representing a notable increase on the 0.7% recorded in the opening quarter of 2016.
When Dublin is excluded from the national figure, the quarterly growth rate stood at 2.0%, which is on par with the rate recorded in the opening quarter of 2016. As such it is clear, that the uplift in house price inflation in Dublin is fuelling overall inflation increases
The opening quarter also saw robust price growth in the other three regional centres. Galway recorded the highest growth at 2.4%, followed by Limerick at 1.9% and Cork at 1.8%.
According to Marian Finnegan, Chief Economist, Sherry FitzGerald; “The notable increase in price inflation reflects both an uplift in demand and a substantial depletion in available supply in the market. Our latest analysis of the stock of property advertised for sale, reveals the stock of available property throughout the entire country has fallen to a historically low level.”
The analysis of the stock of property advertised for sale in the open market in January 2017, reveals that availability had fallen to approximately 22,100 units. This compares to approximately 26,600 units advertised for sale nationally in January 2016, a 17% reduction. Furthermore, current stock represents just 1.2% of the total private housing stock.
The quantity of property available for sale on the open market has fallen steadily over the past seven years, with the latest figure standing 59% lower than in January 2010, when 54,100 units were advertised.
In Dublin, the reduction in supply is even more pronounced. There were 2,800 properties advertised for sale in January 2017, representing just 0.6% of Dublin’s private housing stock. This compares to 4,000 properties available in January 2016, or a reduction of 30% on an annual basis.
Akin to the country overall, supply levels have decreased significantly in Dublin over the past number of years, down by 43% from January 2010 levels. These historically low stock levels magnify the ongoing supply/demand imbalance which exists in the capital at present.
The stock of available properties in the other regional centers has also fallen significantly in recent years. Cork saw just over 2,900 properties for sale in January 2017, representing 1.4% of its private stock. Limerick recorded a reduction of 19% in supply levels over the year to stand at 1,100, or 1.4% of private stock advertised for sale, while Galway saw an 11% decrease in supply levels over the twelve-month period to 1,300, or 1.2% of its private stock.
The latest available data from the Property Price Register (PPR) reveals a disappointing out-turn for 2016. The data reveals that just over 47,300 transactions were recorded in 2016. Excluding multi-family/portfolio sales, the figure is reduced to approximately 44,700 which is largely unchanged from the previous year. This represents 2.4% of the private housing market. The volume of sales grew by a moderate 5% in Dublin during 2016, with just over 14,100 transactions taking place over the year.
A comparison between sales recorded in the PPR and the mortgage drawdown data provided by the Banking and Payments Federation suggests that cash-buyers accounted for 47% of all residential transactions in 2016.
Finally, an analysis of vendor and purchaser profiles in the opening quarter of 2017, reveals a continued outflow of investors from the buy to let market. Reflecting the trends of recent years, 32% of vendors were selling their investment properties, while investors entering the market represented only 19% of purchasers. This trend will exacerbate the supply side crisis in the lettings market, which is already incredibly challenging.
In conclusion, Ms. Finnegan said; The outturn for the opening quarter is not at all surprising. Supported by a growing economy and a notable relaxation in the previously severe macro-prudential rules, demand strengthened, most particularly in Dublin. The limited ability of supply to respond to this increase in demand, has led to a period of heightened price inflation in Dublin, a trend which is likely to continue for the remainder of the year. “
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.
(3) The basket of properties in the barometer of second-hand houses was expanded from approximately 1,400 units to over 1,600 units at the start of 2017.