Friday, September 27 09:08:43
The ISEQ is steady this morning at 4273, up 15 points as European markets are slightly higher on Corporate results.
Davy Stockbrokers looks at Irish house prices this morning:
Stock indices were little changed on Thursday. The Euro Stoxx 50 fell 0.2pc while the S and P 500 rose 0.4pc. Sentiment remained restrained by fears over a US federal government shutdown.
Irish house price inflation accelerated to 2.6pc in August, after a 0.9pc rise on the month. However, within the aggregate, there are starkly diverging trends between Dublin and the rest of the country. House price inflation in Dublin is now +10.5pc, compared with -2.5pc outside the capital. Apartment prices are up 6.6pc on the year, and by 10.1pc in Dublin.
Looking forward, the annual inflation rate in Dublin has probably peaked for now, with strong monthly increases in 2012 (+2.6pc mom in September and +2.7pc mom in November) about to fall out of the annual comparison. House prices outside Dublin have been broadly stable through 2013, according to the CSO measure, so the -2.5pc rate should slowly converge towards zero. However, we know that Irish housing transactions are up just 15.6pc by value, from an exceptionally low base, and with mortgage lending falling back so that cash buyers now account for 60pc of the total.
So the recovery in Ireland's housing market has reflected prices but not a marked recovery in activity. This morning's release of the Nationwide index shows UK house price inflation at 5pc in September. Today's strong out-turn will surely stoke fears that the UK is entering another unsustainable housing boom.
Indeed, the Financial Times reports this morning that Chancellor George Osborne is set to announce that the Bank of England's Financial Policy Committee (FPC) will be given the power to recommend measures to water down the second phase of the Help-to-Buy scheme, which provides government guarantees on new mortgage lending and which is due to start in 2014.
Specifically, the FPC may recommend that the £600,000 cap be reduced, thereby excluding large swathes of the south-east and London. Furthermore, the FPC could increase the fees the Treasury charges to banks for guaranteeing loans.
Once these higher charges are passed on to households, the beneficial impact on mortgage interest rates from the guarantee will be reduced. However, in its policy statement this week, the FPC noted that UK mortgage lending remains weak, loan-to-value ratios on new lending are low, and the house price to income ratio is at a similar level to a decade ago - suggesting little sign of a housing bubble. So the Bank of England taking steps to water down the Help-to-Buy scheme seems unlikely for now according to Davy Stockbrokers