Tuesday, February 25 12:13:12
Last year saw the two-tier Irish property market become more firmly entrenched with Dublin house prices rising sharply amid a housing shortage while the rest of the country saw only limited growth.
That's according to the latest IBF Housing Market Monitor covering the last quarter of 2013.
It found that, while positive trends emerged across some of the key housing market indicators in 2013, significant national variations in market conditions persist. With 2013 as a whole showing increases in the number of properties listed for sale, as well as in the number of property transactions, the rise in house prices in Dublin coupled with a growing shortage of accommodation remains a cause for concern.
Drawing on various published data on the residential housing market to provide a composite analysis on where the market may be going, the Q4 2013 IBF Housing Market Monitor shows a 7pc increase in the number of properties listed for sale, a 10pc increase in the number of housing market transactions and a 6.1pc increase in the level of mortgage approvals with a decline of 5pc in the level of drawdowns.
In his commentary accompanying the IBF Housing Market Monitor, Ronan Lyons, Assistant Professor of Economics, TCD, writes that the trends seen in the volume of transactions registered throughout 2013 is an encouraging sign, particularly as this increase was seen both in Dublin and throughout the country. He also points to the 'hangover' experienced from the end of Mortgage Interest Relief in 2012, commenting that it seems to have impacted the mortgage market, rather than the housing market.
However, despite the positive signs indicated by increasing transactions and property listings, Lyons goes on to highlight the cause for concern in relation to the two tier market which he believes is now firmly established and the driving factors behind this - including a growing shortage of housing supply in Dublin combined with a sharp increase in prices in the capital.
"While trends in both transactions and the mortgage market are encouraging, the supply side of the market continues to remain a concern... Perhaps the most startling thing to emerge from the report is just how few new homes are being built. Fewer than 1,400 homes were completed in Dublin during 2013, when prices rose at double-digit rates, compared to more than 2,200 during 2010, when prices were falling at double-digit rates. While this marks a small increase on the figure for 2012, it is surely of huge concern to policymakers, as is the lack of commencements of new homes. Fewer than 1,500 new homes were started in Dublin in 2013, although that is double the number started in 2012. This compares to roughly 10,000 new households being formed a year in the capital. Taking into account up to 5,000 family homes that come on the market each year due to down-trading and executor sales still leaves a significant shortage of accommodation in Dublin that is growing year on year".
"The government appears to be aware that, if there is anything policy should be aiming for in relation to house prices, it is that these should be stable, at least adjusting for inflation. While overhang from the bubble still persists in many parts of the country, Dublin has had a lack of housing for over a year and yet there is still almost no response in construction. The obstacles to the resumption of meaningful levels of activity in construction in the capital must be understood and soon, if Dublin is to remain competitive and affordable for those on average incomes".