Latest analysis reveals a residential market of stagnant prices and activity

News

Sherry FitzGerald, Ireland’s largest estate agents, announced today (Friday) that the average value of Irish established homes rose by 0.3% during the second quarter of 2019, bringing growth in the year to date to 0.6%. This compares to growth of 3.2% recorded in the same period in 2018. 

Price growth remained very modest in Dublin in the year to date, rising by 0.1% in the opening six months. This compares to growth of 3.3% recorded in the same period in 2018.

When Dublin is excluded from the national figure, the increase is 1.3% in the year to date, compared to growth of 3.1% recorded in the same period in 2018.  

In the regional centres outside of Dublin, Limerick recorded the highest increase of 2.2% during the year to date, while prices in both Cork and Galway increased by 0.8%. and 0.7% respectively.

According to Marian Finnegan, Chief Economist, Sherry FitzGerald; “The latest data on house price performance reveals a continued moderation in price inflation most notably in Dublin.  The ongoing impact of a restricted mortgage market, due to the tightening of the lending policy introduced towards the end of 2017 has restricted affordability and subsequently price inflation.  This is more notable in higher value location such as Dublin, Wicklow and the regional centres. This trend of low price growth is likely to remain a feature of the market.”

The Property Price Register reveals that the total value of residential property, which transacted in the opening quarter of 2019 equalled €3.2 billion. Due to the time lag in logging data to the Property Price Register, quarter one data is the most accurate data available. If one excludes multi-family/portfolio sales, there was approximately 10,900 sales nationally in quarter one, of which 3,500 were in Dublin. On an annual basis, the volume of sales grew by a very modest 0.2% nationally and fell by 3% in Dublin. 

It is particularly notable that the total volume of new dwelling sales recorded on the Property Price Register increased modestly by 2% nationally during the opening quarter of the year, with a 1% increase in Dublin.  Market intelligence suggests that the lower overall volume of activity in quarter one may be as a result of delayed closings due to new building controls and capacity constraints in the industry.

If one excludes multi-family and social property acquisitions the volume of sales to the private market fell by 7% nationwide and 12% in Dublin. This is as a direct result of a notable increase in acquisitions that have been designated for social housing. 

Approximately 90% of all new properties which sold in quarter one 2019 were for less than €500,000 in value.  This points to the success of the ‘Help to Buy’ scheme in delivering much needed starter homes into the market.  Comparatively, second hand sales grew 2% year-on-year and notably remained flat in Dublin in the same period.

Comparing the Property Price Register data to mortgage drawdown data from the Banking and Payments Federation Ireland during the opening quarter of 2019 indicates that 39% of single property transactions did not have a mortgage attached to the transaction, signifying that these properties were likely to have been bought with cash. The comparable figure in 2018 was 41%. 

Owner occupier levels remained strong in the opening half of the year, accounting for 77% of all purchasers, compared to 72% during the same period in 2018. Notably first-time buyers accounted for 51% of all owner occupiers.   

Finally, an analysis of vendor and purchaser profiles during the opening six months of 2019, reveals a continued outflow of investors from the buy to let market. Reflecting the trends of recent years, 35% of vendors were selling their investment properties, while investors entering the market represented only 16% of purchasers. This trend continues to deepen the supply side crisis in the lettings market, which is already incredibly challenging. The volume of investors in the new homes sector is negligible, outside of the multi-family sector. 

In conclusion, Ms. Finnegan said; “A review of the residential market in the opening half of 2019 reveals some interesting trends.  The constraints on mortgage lending are effectively controlling price inflation however, they also appear to be impacting activity. On an annual basis, the volume of sales grew by a very modest 0.2% nationally and fell by 3% in Dublin. This is disappointing. Despite the strength of our economic performance residential activity levels remain well below norm and are now contracting in some locations.

It is a cause for concern, as a moderation in activity may lead to a slowdown in construction activity. There is some industry evidence that the new homes market may be slowing due to issues around capacity and building controls. However, any reduction in activity needs to be monitored carefully. The underlying challenges in the industry remain and every effort needs to be made to support a significant uplift in the delivery of homes to meet the growing needs of our society.”

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For any further information, please contact;

Jill O’Neill                                                                                       Marian Finnegan

Director of Communication                                                       Chief Economist

Sherry FitzGerald Group                                                             Sherry FitzGerald Group

Ph: 01 2376 500 / 086 252 3277                                                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.