The latest figures from the Central Statistics Office (CSO) show that despite ending a run of four consecutive monthly declines, the annual rate of price inflation continued to ease in the Irish residential market in March.
Prices rose by 0.2% mom and were up 3.9% year on year (yoy). This represents the lowest rate of inflation since the price recovery began in 2013. Price growth outside Dublin (+6.8% yoy) continues to outstrip that seen in the capital.
Transactions grew by 5% yoy in the first quarter, with new homes transactions up by 20% yoy and existing homes up by just 1% yoy. Within the new homes sector, the non-household sector is becoming an ever-important source of demand.
In Q1, the non-household sector accounted for 35% of new home transactions, up from 15% in Q1 2018, and represented the biggest single buyer segment. It is likely that the burgeoning Build-to-Rent (BTR) sector is playing a significant role here.
Goodbody Stockbrokers say that while the property price index is a lagging indicator, the increase in the stock for sale suggests that prices may remain flat over the coming period, especially in Dublin. Macroprudential mortgage rules are acting as a binding constraint to significant price growth.
The financial experts believe these issues can have an impact in the short-term, but there remains a significant gap between housing demand and supply, thus upward pressure on prices and rents could remain over the medium-term.
According to Goodbody Stockbrokers, "There has been a debate in Ireland of late about whether this BTR sector is crowding out FTBs. Given the shortages that exist across tenures and
accommodation types, this new source of capital represents an important input into the growth in the Irish housing stock."