Property Pad

2nd January 2015

Irish house prices rise by 16.3% in the twelve months to end December 2014

By Sherry Fitz.

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Statement by Marian Finnegan, Chief Economist, Sherry FitzGerald Group Sherry FitzGerald House Price Index Friday, January 2nd, 2015

Key findings;

  • The average value of residential property in Ireland rose by 2.0% in the fourth quarter of 2014; this brings the growth in the year to 16.3%. 
  • Dublin house prices rose by 1.2% in the fourth quarter of the year, this brings the growth in the year to 18.0%.
  • Notably, when Dublin is excluded from the national figure, the quarterly growth figure was 3.2%. Residential property outside Dublin was up 13.9% in the twelve months to end December 2014.
  • The regional centres also experienced upward price movement during the nine month period, most notably in Cork with price inflation of 17.9% in the twelve months to end December.
  • Owner occupation still dominates the purchaser profile at 77%, while investors now account for 16% of all purchasers in the year.
  • First time buyers remain a relatively active cohort in the market accounting for 17% of the properties traded in the year; notably this compares to 20% in the same period in 2013.
  • An analysis of the profile of vendors who sold their property through Sherry FitzGerald in the year revealed that 32% of vendors were selling investment properties, while executor sales accounted for 13% of the market.

Commenting on the results, Marian Finnegan, Chief Economist Sherry FitzGerald said; “2014 was undoubtedly a fragmented year for the Irish property market.  For the Dublin market the year opened to very tight supply and pent- up demand resulting in buoyant price inflation, of 12.6% in the first six months.  That said, an increase in supply and a more temperate demand outlook saw price growth rates effectively half in the latter six months with overall growth for the year coming in at 18%”

“In contrast, the market outside Dublin remained more constant in its performance with growth of 13.9% in the twelve month period, notably with the strongest performance in the latter six month period.  As such the Irish market grew by 16.3% in 2014.”

The regional centres all performed strongly, notably the strongest price performance was Cork at 17.9%, followed by Galway at 14.5% and Limerick at 11.8%

Activity levels improved notably in the country overall during the year with current indications suggesting that in excess of 40,000 transactions occurred during the year, representing a significant increase on transactions in 2013 which stood at 30,000.   Interestingly, data available to date suggest that there will have been in the order of 14,000 property transactions in Dublin in 2014, compared to 10,000 in 2013.

2015 is certainly a more challenging year to predict for many reasons in particular the recent intervention by the Central Bank, in which the Bank seek to minimise the risk of another credit driven property bubble by limiting loan to value and loan to income ratios.   As this is a proposal rather than a definitive policy it is difficult to factor in what impact it will have on demand in 2015. 

On the positive side, demand is recovering gradually reflecting the uplift in consumer sentiment and economic growth.  That said, supply remains significantly constrained.  As such there is every reason to believe that prices will continue to rise at above trend levels in the short term in many locations.  This will be particularly evident in the urban centres where supply is most constrained. 

The depletion in the quantity of buy to let property will also fuel rental inflation.  This will be more augmented if potential first time buyers are displaced into staying in rental accommodation for longer by a need to save a larger deposit.

The medium term outlook for the market is more difficult to predict, it will be some time before the mismatch between demand and supply is rectified and as such some time before the market truly stabilises.  In the interim, there is likely to be some volatility with above trend price and indeed rental inflation in urban centres.

Listen here to Marian Finnegan's interview on this latest report with Ivan Yates on Newstalk this morning.



For any further information, please contact;


Jill O’Neill                                                                                          

Director of Communication                                                        

Sherry FitzGerald Group                                                                              

Ph: 086 2523277                                                                              



Marian Finnegan

Chief Economist

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 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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