News

29th March 2018

“Supply constraints persist but positive impact of ‘help to buy’ notable in new homes market”

Statement by Marian Finnegan, Chief Economist, Sherry FitzGerald Group Thursday, March 29, 2018

Sherry FitzGerald, Ireland’s largest estate agents, announced today March 29th, that the average value of residential property in Ireland had risen by 2.1% during the opening three months of 2018. This compares to an increase of 1.9% recorded in the same period in 2017.

The average value in Dublin rose by 2.3% in the first quarter, compared to 1.8% recorded in the same period in 2017. If one excluded Dublin from the figures, the rest of Ireland saw growth of 1.7% in the quarter, compared to growth of 2.0% recorded in the opening quarter of 2017.

The regional centres of Galway, Cork and Limerick also experienced price growth of 2.0%, 1.1% and 0.9% respectively over the three-month period.

Commenting on the results; Marian Finnegan, Chief Economist, Sherry FitzGerald Group said; “The continued strength of price inflation during the year to date is evidence of the persistent misalignment between supply and demand. It is very clear that moderate price inflation will only be achieved through a notable increase in the stock of residential property.”

The analysis of the stock of property advertised for sale in the open market in January 2018, reveals that availability had fallen to approximately 21,200 units. Current stock represents just 1.1% of the total private housing stock.  There were 3,100 properties advertised for sale in January 2018, representing just 0.6% of Dublin’s private housing stock.

The quantity of property available for sale on the open market has fallen steadily over the past eight years, with the latest figure standing 61% lower than in January 2010, when 54,100 units were advertised.  

The latest available data from the Property Price Register reveals that just over 54,000 transactions were recorded over the course of 2017. Due to the time lag in logging data to the PPR, this is the most accurate data available. Excluding multi-family/portfolio sales, the figure falls to approximately 50,900, representing an increase of 14% on 2016. In Dublin, the volume of sales grew by 18%, with approximately 16,650 transactions taking place in the twelve-month period. 

A total of 8,400 new dwelling transactions were recorded in the Property Price Register during 2017, a notable 47% increase on 2016 volumes. The median value of all new dwellings which transacted during the year was 9% higher, than the same period in 2016. 

Dublin accounted for 43% of total new dwelling sales, with the volume of sales growing by 66% in the year. It is particularly noteworthy that the median value of the new dwellings transacted in Dublin fell by 3% compared to median values in 2016. The volume of new dwelling transactions also increased significantly in Meath, Kildare and Wicklow by 46%, 23%, and 21% respectively.

According to the latest mortgage market data by the Banking and Payments Federation Ireland, mortgage activity continues to intensify, while the ratio of cash buyers in the market is in decline. Comparing the Property Price Register data to the number of mortgages drawn down, suggests that 42% of single property transactions did not have a mortgage attached to the transaction during the year. This compares to 44% in 2016. 

Owner occupier levels remained strong during the opening months of 2018 accounting for 71% of all purchasers. An analysis of the profile of vendors and purchasers, who sold their property through Sherry FitzGerald in the opening quarter of 2018, reveals a similar pattern to recent years, where the buy to let market has witnessed an outflow of investors. During quarter one 2018, 32% of Sherry FitzGerald vendors were selling their investment properties, while investors entering the market represented only 19% of purchasers in the established housing market. 

In conclusion Ms Finnegan noted; “The results of our latest analysis of the residential market reveals a market where supply constraints and elevated price inflation persist.  However, there is evidence of a significant increase in the volume of new home sales, which is to be welcomed. This is particularly notable in Dublin and the surrounding counties all of whom experienced a double digit increase in the volume new home transactions in the year. The fall in the median price of a new home sold in Dublin reflects the increase in the volume of starter homes, which underpins the success of the ‘help to buy’ scheme. 

With this in mind, it is worth noting that the ‘help to buy scheme’ is due to cease in 20 months-time. Given its success to date it is appropriate to suggest that consideration be given to extending the term of the ‘help to buy scheme’ until such time as the starter home market returns to equilibrium.”

ENDS

For any further information, please contact:

Jill O'Neill

Director of Communication

Sherry FitzGerald Group

jill.oneill@sherryfitz.ie   

Ph: 01 237 6500 / 086 252 3277                                                                                    

Marian Finnegan

Chief Economist

Sherry FitzGerald Group

marian.finnegan@sherryfitz.ie

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.