Ireland’s largest estate agents, Sherry FitzGerald, have today warned that the combination of strengthening demand and limited supply has placed upward pressure on house prices.
Research from Sherry FitzGerald shows that this is most noticeable in rural Ireland with counties like Donegal, Offaly, Roscommon, Westmeath and Wexford all experiencing double digit growth. That said, it should be noted that average values still remain approximately 40% off peak 2006 levels.
Notably, the trend of investors selling out of the market continued throughout 2016 as 32% of properties traded through Sherry FitzGerald Group were vendors selling investment properties while a further 11% were repossessed properties, which were largely buy to let properties. In contrast, only 20% of purchasers were investors.
The latest data available from the Property Price Register (PPR) reveals that approximately 34,000 residential units transacted in Ireland during the opening nine months of 2016. When you exclude multi-family/portfolio sales, this figure reduces to approximately 32,150, of which approximately 10,200 sales were in Dublin.
Excluding multi-family activity, residential sales activity saw little change compared to the same period in 2015, with only a 1% increase recorded nationally in the first nine months. In Dublin, transactions increased by 5%.
A comparison between mortgage drawdown data by the Banking and Payments Federation Ireland (BPFI) and the Property Price Register (PPR) suggests that cash purchasers were responsible for 46% of all residential transactions in the first nine months of 2016.
Approximately 3,900 new residential units were sold in the first nine months of the year, compared to 3,400 in the same period in 2015. Notably 1,460 were located in Dublin compared to less than 1,000 in 2015. It is also worth noting that the average value of a new unit sold in 2016 was 18% higher than the comparable figure for 2015.
Chief Economist at Sherry FitzGerald Group, Marian Finnegan said, "There is no doubt that 2016 was a turning point for the residential market. Ten years after the crash began, the announcement of the Government’s Action Plan for Housing and Homelessness during the summer of 2016 provided a vision for housing, together with a clear strategy on how the vision will be achieved. The combination of this strategy and the revised macro prudential policy and the initiative for first time buyers launched in the Budget will all serve to assist the market in its recovery."
She added, "However, despite the considerable progress made earlier in the year to restore confidence in the construction sector, the announcement of the Government’s plan for the rental sector in December was disappointing. There is undoubtedly clear evidence that current levels of rental inflation are a direct market response to inadequate supply levels and yet the Government plan does not address this at all. Instead it focussed on capping rental inflation to 4% in key urban areas. This short-term approach was particularly disappointing as rental levels are now exceeding previous peaks in many urban centres."