4 April 2016
By Bryan T. Smyth
Renewed price momentum in the first three months of the year indicates that the property market is set to rebound in 2016 but Dublin is likely to lag behind the rest of the country according to the latest house price survey from MyHome.ie in association with Davy.
Having declined towards the end of 2015, asking prices for newly listed properties for sale rose by 2.1% nationally and by 0.9% in Dublin in Q1.
The report predicts Irish house price inflation will register another solid gain of close to 5% in 2016, with the rest of the country leading Dublin, due to affordability constraints in the capital.
The general recovery in property prices around the country was particularly evident in Cork City where prices rose by 2.4% on the quarter to €215K, up 10.3% on the year. This is the first double-digit rate of growth in Cork city and the fastest pace of growth since 2006.
In the county as a whole the median asking price across all property types remained unchanged at €220K, up 2.6% on the year. The price of 3 bed semis also remained unchanged at €195K with Cork one of just four counties where prices remained unchanged for this house type; the others being Kerry, Kilkenny and Wexford. In fact Wicklow was the only county to record a price decrease for this house type.
The price of 2 bed apartments across Cork also remained unchanged at €135K, up 5.5% year on year, while the price of 4 bed semis rose 2% for the quarter to €245K and are up by the same percentage for the year.
The mix adjusted asking price for new sales nationally is €220K an increase of €5K on Q4 2015 while the corresponding figure for Dublin is €315K an increase of €2,600. For the entire stock of properties listed for sale on the website the national mix adjusted figure is €208K while in Dublin the figure is €290K.
The author of the report, Conall MacCoille, Chief Economist at Davy, said a key factor supporting house prices this year will be a tighter housing market.
“The stock of properties listed for sale on the MyHome website in Q1 fell to a fresh low of 21,650, down 6% on the year. Despite popular opinion, the immediate impact of the Central Bank lending rules was to make it easier to buy as sellers anticipated the slowdown in Dublin house prices and decided to bring their properties to the market in 2015.”
“This won’t be repeated this year while housing supply in the capital is likely to pick up less sharply through the summer months. This is because the ambitious goals set under the last government’s Construction 2020 strategy are unlikely to be attained with no stable coalition yet formed for the new Dail. Overall, homebuilding levels look set to remain depressed for some time and while this will support Irish house prices, it will hurt activity levels” MacCoille said.
The report’s analysis of the Property Price Register indicates that Dublin and the commuter belt counties last year accounted for 75% of transactions that exceeded €220K, the threshold below which lenders require a 10% deposit.
Of the 48, 374 residential property market transactions recorded in 2015, just 35% (16,893) exceeded €220K. Of these Dublin accounted for 60% or 9,987. Put another way 59% of Dublin transactions exceeded the €220K threshold, whereas outside of the commuter counties just 17% of transactions, or 4,300, exceeded that mark.
“The Central Bank mortgage lending rules have prevented households from reacting to the lack of housing supply by taking on ever more highly leveraged loans and bidding up house prices further. However our analysis shows this has been mainly a Dublin/commuter belt phenomenon where the lack of housing supply is most severe and affordability most stretched” MacCoille said.
Angela Keegan Managing Director of MyHome.ie<http://myhome.ie> said it was very encouraging to see that the rest of the country was leading the rebound in the property market while prices in Dublin were also rising again. She said the low level of transactions remained a major issue.
“The three bed semi is the most popular house type in the country and the fact that Wicklow was the only county in the country to record a price decrease – and a very modest decrease at that – is very heartening. In fact 21 counties recorded price growth while prices remained stable in four others. As the report indicates price growth around the country is now set to surpass Dublin and this levelling effect is a most welcome development.”
“Our analysis of the PPR shows that residential property transactions grew by almost 15% in value terms to €10.7bn in 2015, up from €9.3bn in 2014 and €6bn in 2013. The challenge for the sector will be to maintain this momentum in a market where stock is reduced and where the level of new homebuilding is at a very low level” Keegan said.
Full report available on request and at http://www.myhome.ie/reports