September 27, 2016 / Market

Irish Housing Chartbook (Sept 16) – Goodbody

New Irish housing statistics have been released today for the first time. Price data now incorporates cash purchases for the first time, thus giving us a more comprehensive picture of the market (cash purchases have consistently been c.50% of purchases over recent years). New information on regional price movements, average house prices and transactions also enhance our knowledge of the market. See our attached new housing chart pack and here are the main takeaways:

 

A bigger peak to trough decline…
The previous index put the peak-to-trough decline at -51%, but the new index estimates this fall at -54%. The peak in Irish prices is now estimated to have occurred in April 2007, as opposed to September 2007. The adjustment is mainly due to a bigger decline outside of Dublin (-57% versus -49% previously). The peak to trough decline in Dublin is estimated at -59% (-57% previously). Prices in Dublin (April 2012) troughed earlier than the rest of the country (May 2013).

 

…but a bigger bounce back
Prices have risen by 40% since the trough nationally, with significantly larger increases in Dublin (+57%) and Dublin apartments (+70%) specifically. Combining these, prices remain 36% below the 2007 peaks, 3% lower than previously estimated. This result is likely to further reinforce caution on the part of the banks in relation to provision write backs on their mortgage books.

 

Recent trends more positive
The most recent trends suggest somewhat of a recovery in price growth. In July, prices rose by 2.5% mom nationally, with the annual rate of growth rising to 6.7% yoy, the fastest pace since June 2015. Price growth outside of Dublin (+11.3% yoy) remains higher, but there was also a modest acceleration in price growth in the capital (+3.8% yoy versus +2.5% yoy in June). This may be a further reflection of the impact of the macro-prudential rules wearing off.

 

Regional differences are significant
The importance of looking at regional sub-markets is highlighted by an analysis of average price achieved over the past twelve months. The average transacted price in Dun Laoghaire-Rathdown (South Dublin) was €539K, almost 8 times the average transaction price in the cheapest (Longford, €81K).

 

Institutions & investors a large part of the market
Information on the type of buyer is available for the first time. In the twelve months to July, FTBs represented 19% of total transactions. This compares to 56% of total mortgage transactions over the most recent 12 month period. Unsurprisingly, therefore, the majority of cash purchasers are investors and/or institutions. We estimate that this grouping accounted for 34% of purchases over the most recent period.

 

Transactions on new homes remain on the floor
Transactions on new homes remain exceptionally low, amounting to 3,161 over the past twelve months. Over the entire period from 2010, transactions on new homes amounted to 17,848. This compares to 72K housing completions over the period. It is unlikely that there is a large stock of unsold homes and more likely that the housing completions data has been overestimating the scale of new supply over recent years. This transaction figure is more in line with the number of housing scheme commencements over that period and highlights the degree to which supply has been undershooting demand over this period.