Housing transactions continue to recover in Ireland, while prices remain resilient, in spite of the dislocation brought about by COVID-19, according to Goodbody Stockbrokers.
Official CSO data shows that nationally, prices rose by 0.2% month on month (mom), with the annual rate standing at -0.8%. There was a modest underperformance in Dublin at - 1.7% year on year (yoy), relative to outside the capital (0.1% yoy), but there is nothing new in these trends.
Goodbody say more interesting is the breakdown that is provided for the first time that splits out the performance of the new and existing homes markets. Price trends in the new homes market tends to be less volatile than in the second hand market.
In the year to third quarter 2020, new homes prices rose by 1.7% yoy, while second-hand homes prices fell by 1.6% yoy. Over the ten-year time series, new home prices rose by 7%, relative to a 22% increase for the second-hand market. Notably, there is no discernible difference in price trends in the new and second hand market since the introduction of the Help-to-Buy scheme for new homes in the third quarter 2016.
While transactions are improving, this official data is likely to be lagging activity on the ground. This is due to the fact that transactions are counted when stamp duty returns are filed, which clearly comes at the end of the buying process. In September, the number of transactions filed fell by 21% yoy. In the third quarter, transactions fell by 34% yoy, with new homes down 16% yoy and existing home transactions down 39% yoy.
There is no great difference in transaction trends overall by region in the year to date, but there is a rather large range in the performance of new home sales, ranging from -41% in the Border counties to +37% in the Midlands. Sales of new homes in Dublin are up 1% in the year to date.
According to Goodbody Stockbrokers, "Given a surge in mortgage approvals in September and more recent positive market evidence, we would expect these transaction trends to improve in the final quarter, despite the imposition of another lockdown. A reduction in new home starts may impact on 2021 output though."