Property Pad

10th October 2013

“Irish house prices increase for the first time in seven years”

By Sherry Fitz.

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Statement by Marian Finnegan, Chief Economist, Sherry FitzGerald Group

Thursday, January 2, 2013

Key findings

  

  • The average value of residential property in Ireland rose by 2.8% in the final quarter of 2013, bringing the annual figure to 9.2%.
  • Notably, Dublin house prices rose 4.1% in the fourth quarter of 2013, and 14.1% in the twelve months to the end of December 2013.
  • That said it is worth noting that when Dublin is excluded from the national figures, the annual growth figure is a more moderate 3.2%

Commenting on these results, Marian Finnegan, Chief Economist, Sherry FitzGerald Group said;

“After six consecutive years of price deflation, 2013 saw a return of price inflation in the Irish residential market. That said, all markets did not benefit equally from this recovery. Fuelled by a significant shortage of stock available for sale, house prices in Dublin rose by 14.1%. The cities of Galway and Cork also saw price inflation re-emerge with growth of 13.0% in Galway City and 4.5% in Cork city during the twelve months to the end of December.

Early estimates would suggest that under 25,000 properties transacted in Ireland in 2013, although this figure will probably increase a little as final sales are logged on the property price register. Nevertheless this is still quite low by either historical or international standards for a population of our size. As such it is evident that the recovery in prices is a function of a shortage of stock rather than exceptional demand.

Another notable feature of the market is the strength of cash, 54% of all transactions were bought with cash in the first nine months of the year. Investor demand was also noteworthy with 13% of all individual transactions bought by investors. Furthermore, there has also been a notable increase in professional investor activity in the residential market with €232m invested in the multi-family sector of the property market during 2013. The market attracted a mix of both private Irish investors and high profile international investors such as Kennedy Wilson who bought residential blocks such as Clancy Quay in Islandbridge Dublin 7.

Looking to the year ahead, it seems likely that 2014 will be in many ways similar to the year past. The combination of recovering demand and limited supply in our regional centres will almost inevitably fuel price growth. However the more rural locations where supply is more plentiful and labour market conditions challenging will most likely remain somewhat subdued.“

Further findings;

  • An analysis of transactions closed in 2013 reveals that 79% of the second hand homes transacted through Sherry FitzGerald were purchased by owner occupiers; this compares to 82% in 2012.
  • Notably, investors bought 13% of the properties transacted in the year; this compares to 10% in 2012
  • First time buyers remain a relatively active cohort in the market accounting for 20% of the properties traded in the year; notably this compares to 29% in 2012.
  • A comparison between mortgages drawn-down during the first nine months of the year and the property price register suggest that cash purchasers were responsible for 54% of all residential transactions in the first nine months of the year. This compares to 43% in the same period in 2012.
  • An analysis of the profile of vendors who sold their property through Sherry FitzGerald in the twelve months of the year revealed that 28% of vendors were selling investment properties. Executor sales accounted for 18% of the market.

For any further information, please contact;

Jill O’Neill
Director of Communications
Sherry FitzGerald Group

Note

  1. Founded in 1982, Sherry FitzGerald has grown to become Ireland’s largest firm of estate agents with over 100 owned and franchised branches throughout Ireland.
  2. The Sherry FitzGerald barometer of second-hand house prices is the longest established indices 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.
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