Statement by Marian Finnegan, Chief Economist, Sherry FitzGerald Group Tuesday, October 3rd, 2017
Sherry FitzGerald, Ireland’s largest estate agents, announced today (October 3rd) that the average value of residential property in Ireland rose by 2.3% during the third quarter of 2017. This brings growth in the year to date to 6.8%, and compares to a year to date increase of 4.0% recorded in the corresponding period in 2016.
In Dublin, average values rose by 2.5% in the third quarter of 2017, bringing growth in the year to date to 7.3%. This represents a notable increase on the 2.7% recorded during the first nine months of 2016. When Dublin is excluded from the national figure, the quarterly growth figure was 2.0%. The year to date figure came in at 6.2%, compared to 5.6% in the same period in 2016.
The regional centres outside Dublin continued to experience robust price growth during the year to date, most notably Galway with price growth of 6.4% in the nine months to September. Cork recorded growth of 5.8%, followed by Limerick with growth of 5.5%.
According to Marian Finnegan, Chief Economist, Sherry FitzGerald; “The pace of price inflation reflects the impact of the supply side crisis, which the market continues to endure. As such, price inflation will remain elevated until supply increases significantly.”
The latest available data from the Property Price Register reveals that just over 23,200 transactions were recorded during the first six months of 2017. Due to the time lag in logging data to the PPR, the first six months is the most accurate data available. Excluding multi-family/portfolio sales, the figure falls to approximately 22,100, representing an increase of 9% on the same period in 2016. In Dublin, the volume of sales grew by 10%, with just over 7,000 transactions taking place in the opening half of the year.
According to the latest mortgage market data by the Banking and Payments Federation Ireland, there has been an increase in mortgage activity, which can be partly attributed to the relaxation of the macro prudential rules which came into effect in January 2017. Comparing the Property Price Register data to the number of mortgages drawn down suggests that 43% of single property transactions did not have a mortgage attached to the transaction during the first six months of the year. This compares to 47% in the same period in 2016.
Notably, new dwelling transactions recorded in the Property Price Register during the first six months saw a higher growth rate of 24%, compared to the same period in 2016. The average value of new dwellings transacted increased by 10%. Dublin accounted for 40% of total new dwelling sales, with sales volume growing 37%. Average values in Dublin grew more moderately, by 2%.
Commenting Ms Finnegan noted; “The increase in the volume of new dwelling transactions is to be welcomed. It is a small step on the road to a more stable market. This combined with the modest levels of value inflation in the new dwellings market in Dublin, is a real indicator of the positive impact that the Help to Buy scheme has had on the market.”
That said, it is worth noting that although new dwelling sales are growing faster than the general market, it is from a low base. New dwelling sales totalled 3,150 in the first six months, representing just 14% of the total residential sales.
Furthermore, the stock of properties available for sale remained critically low. The latest bi-annual analysis of second-hand properties advertised on the market reveals that the stock of available properties had fallen nationally to 25,100 units in July 2017, an annual decrease of 9%. The current available stock represents just 1.3% of the total private housing stock in Ireland.
In Dublin, there were only 3,900 units advertised for sale in July 2017, representing just 0.8% of Dublin’s private housing stock, and an annual reduction of 13%. All four local authorities saw supply levels decrease on an annual basis.
Notably, the latest analysis of vendor and purchaser profiles in the nine months to the end of September reveals the continued loss of essential buy to let properties from the market. This reflects the trend of recent years whereby 33% of vendors were selling their investment properties, while investors entering the market represented only 19% of purchasers. This continued outflow of investors needs to be addressed in the forthcoming budget.
In conclusion, Ms. Finnegan said; “Fourteen months after Rebuilding Ireland was launched the residential market is still in crisis. Supply is critically low, price inflation is elevated and investors continue to flood out of the market. The forthcoming budget represents the best opportunity for the Government to address these issues. This housing crisis needs to be treated as a crisis, with significant Government intervention now needed to bring about stability.”
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.