Banking & Payments Federation Ireland (BPFI) today published the BPFI Housing Market Monitor for Q4 2017. In addition to presenting a unique range of loan-level data, the Monitor draws on a range of published data under the three key headings of housing supply, housing prices and rents, and housing transactions in its assessment of the current state of the housing market.
In his commentary accompanying the report, BPFI’s Chief Economist, Dr Ali Uğur, refers to data from the Department of Housing, Planning, Community and Local Government as showing a significant pick-up in both house completions and commencements – increases of 29.7% and 33% respectively over 2017. While this pick-up is most welcome, he goes on to state:
“While the gap between current demand and supply is narrowing, the delayed response in supply is creating latent demand for future years. Census 2016 showed that the total housing stock grew by just 8,800 (0.4%) between 2011 and 2016, whereas the population grew by 173,613 (3.8%) during the same period. Census data also shows that nearly one third of the Irish housing stock was built before 1970 and the home ownership rate has fallen from 74.7% in 2006 to 67.6% in 2016 – a 50 year low.”
Dr Uğur also notes that the statistical link between commencements and completions has broken down, such as to call into question the reliability of published completion figures. Based as they are on connections to the electricity network, these completion figures capture the number of units coming into the market. However, they do not necessarily reflect the true nature of full residential construction activity.
Ali also points to on-going growth in mortgage activity in support of the housing market. “BPFI data show that there were 934,798 mortgage drawdowns valued at €7.3 billion in 2017 compared to 29,498 drawdowns valued at €5.7 billion in 2016 – representing an 18% increase in volume terms and 29% increase in value terms. Mortgage approval activity also significantly increased in volume terms by 23% in 2017 bringing the total number of approvals to 43,074. In value terms activity increased by around 34% in 2017 with the total value of approvals reaching €9.3 billion in 2017.”
Finally, Dr Uğur also points on the risks associated with further price rises, “Price developments in the Irish residential property market have been driven mostly by the lack of supply in the market, particularly in the last three years. However leading indicators have shown pressures building up in relation to input prices which can have a knock on effect on output prices. Rising costs could lead to future price rises even as the supply gap closes.”
To view the report, click here.
Note: Banking & Payments Federation Ireland (BPFI) is the voice of banking and payments in Ireland, representing over 70 member institutions and associates
Contact: Keira Doyle, Head of Communications, 086 269 4460