The Residential Property Price Register released yesterday shows that €10.9bn of transactions were recorded in 2016, up 1.3% on 2015. However, transaction volumes contracted in 2016, falling to 44,956 – down 7.8% from 2015.
This would indicate that the tight housing market is contributing to strong price gains but holding back transactions and mortgage lending.
Lending volumes have expanded by 2.5% in the first three quarters of 2016. This means cash buyers will account for less than 50% of housing market transactions in 2016 – for the first time since 2012.
The register for 2016 is not yet complete. Typically, only 60% of December’s transactions should have been registered at this point. Nonetheless, residential transaction volumes appear to have fallen by at least 3-4%. No doubt this reflects the tightness of Ireland’s housing market, helping push prices upwards but holding back transaction volumes.
For example, the number of properties listed for sale on MyHome fell to 20,875 in December 2016, down 7.7% on the year to a historic low. In Dublin, liquidity is particularly poor with just 3,619 properties listed for sale, down 20% on the year. Overall, the 44,956 transactions in 2016 represent just over 2% of Ireland’s housing stock of 2m homes. This is close to half UK transaction rates.
According to Davy Stockbrokers, "We had forecast that mortgage lending for house purchase would expand from €5bn in 2016 to €6bn in 2017. Certainly, house price inflation should ensure that the mortgage market sees significant growth in 2017. However, in a tighter housing market, there is a risk that the growth of mortgage lending volumes could be limited."