- Underlying trend shows increase in mortgage drawdowns
- Signs of shortage of family homes in Dublin
The IBF Housing Market Monitor Q1 2013, published today by the Irish Banking Federation (IBF), points to a 14% increase nationally in the number of residential property transactions during the first three months of the year, as well as to signs of continued stabilisation in prices.
And in his commentary accompanying the IBF Housing Market Monitor, Goodbody Chief Economist, Dermot O’Leary, states that, while nationally we have an oversupply of housing units, a shortage of appropriate family homes is becoming increasingly clear in Dublin.
Pictured at the publication of the IBF Housing Marking Monitor Q1 2013: Dermot O’Leary, Chief Economist, Goodbody Stockbrokers and Maurice Crowley, Head of Retail, IBF.
Drawing on various published data on the residential housing market to provide a composite analysis on where the market may be going, the IBF Housing Market Monitor shows that, while the number of properties listed for sale during Q1 2013 fell 15% compared to the previous year, there were 14% more property transactions over the same period. In fact, this is the sixth consecutive quarter of year-on-year growth in the volume of transactions. At the same time, property prices continue to show signs of stabilisation, with the national change in prices being -3% in Q1 2013 compared to the same quarter in 2012. Dublin property prices have seen their first year-on-year gain since Q3 2007 with prices 1.4% higher than a year ago.
Analysing a range of statistics under the three key headings of housing supply, housing prices and housing transactions, and assessing these on a composite basis, Dermot O’Leary concludes that the mortgage market experienced in the first months of 2013 a ‘hangover’ from the ending of mortgage interest relief at the end of 2012. Given that mortgage drawdown activity was undoubtedly brought forward from Q1 2013 into Q4 2012 as a result, he believes it’s best to look at the two quarters together. On that basis, mortgage drawdowns were actually up by 36% relative to the same two quarters a year earlier he states.
“In contrast to the fall in mortgages drawn down, the number of property transactions increased by 14% in Q1… While one interpretation of this may be that credit is not available in the banking system, another is that buyers are using cash to invest in the Irish property market given the superior returns relative to ever-shrinking deposit rates in the Irish banks. Either way, it is a vote of confidence that buyers are willing to dip their toes into the Irish housing market at current valuations.”
Pointing to significant differences emerging between the capital and the rest of the country, O’Leary goes on to state:
“There are increasingly divergent price trends evident across the country, with Dublin returning to annual growth for the first time in over half a decade… However, a concern would be that prices are rising predominantly because of a lack of available supply… Ireland does have an oversupply of housing units nationally, but it is becoming increasingly clear that there is a shortage of the appropriate family homes in the capital.”
The IBF Housing Market Monitor is published quarterly and can be viewed on the web here.
Note: The Irish Banking Federation (IBF) is the principal voice of the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.
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