image description

BPFI Housing Market Monitor highlights decline in cash sales and increased competition for home purchase from non-household sector

6th March 2019

Banking & Payments Federation Ireland (BPFI) today published the BPFI Housing Market Monitor for Q4 2018.

In his commentary accompanying the monitor, BPFI’s Chief Economist, Dr Ali Uğur, notes that, while housing supply is improving, household buyers are facing increasing competition from the non-household sector particularly for newly built homes:

“The role of non-household buyers, which include private companies, charitable organisations, and state institutions, in housing market transactions has increased particularly since 2010 where they accounted for around 4% of all market-based activity, whereas this ratio has increased to 17% in 2018. In terms of transactions in the newly built housing units, non-households accounted for around 22% of all transactions in this category in 2018 compared to 7% in 2010. Given the growing importance of involvement from institutional investors and higher social housing output in the short term, it is likely that a higher portion of the new housing units in the coming years will be accounted for by these segments.”

Drawing the important distinction between pure cash sales and institutional investor transactions, Dr Uğur also outlines the fall in cash sales seen over the last year.

“Institutional investor or non-household sector transactions should not be confused with cash transactions as these require financing to a certain extent as opposed to pure cash sales or sales not financed with a mortgage. In this regard, this Monitor has been tracking cash sales in the residential property market*, and we see that cash sales accounted for 27.8% of sales on an annualised basis in Q4 2018, down from 32.2% a year earlier.”

BPFI today also published the latest figures from the BPFI Mortgage Approvals Report for January 2019.

The following are the key elements:

  • A total of 3,037 mortgages were approved in January – some 1,479 (48.7% of total volume) were for first-time buyers (FTBs) while mover purchasers accounted for 851 (28.0%).
  • The number of mortgages approved rose by 4.4% month-on-month and fell by 3.4% year-on-year.
  • Mortgages approved in January 2019 were valued at €672 million – of which FTBs accounted for €327 million (48.6%) and €222 million (33.1%) by mover purchasers.
  • The value of mortgage approvals rose by 2.4% month-on-month and fell by 2.5% year-on-year.

Re-mortgage/switching approvals rose on a year-on-year basis – by 12.4% in volume and by 5.6% in value terms.

There were 45,548 mortgage approvals in the twelve months ending January 2019, valued at €10,109 million. Annualised mortgage approval activity  decreased in volume terms by 0.24% compared with the prior period and decreased in value terms by 0.17% over the same period.

Data collection for the BPFI Mortgage Approvals Report began in September 2012 covering the period from January 2011 onwards in respect of the market’s main mortgage lenders**. The BPFI Mortgage Approvals Report January 2019  as well as the time series data file is available on the BPFI website here.

 

Notes:

* The cash sales ratio is calculated by dividing the volume of mortgage drawdowns for house purchases and self-builds by the volume of residential property purchases by households at market prices, then subtracting that ratio from one.

**The full time series of monthly data from January 2011 onwards is available on the BPFI website.

Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

The BPFI Housing Marking Monitor is published quarterly. 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.

 

Contact: Jillian Heffernan, Head of Communications, jillian.heffernan@bpfi.ie 087 9016880

< View all news articles