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BPFI Housing Market Monitor points to housing supply matching current demand in three years time

4th December 2018

Banking & Payments Federation Ireland (BPFI) today published the BPFI Housing Market Monitor for Q3 2018. The Monitor draws on BPFI’s unique loan-level data as well as a range of published data under the three key headings of housing supply, housing prices and rents and housing transactions for its assessment of the current state of the housing market.

In his commentary accompanying the report, BPFI’s Chief Economist, Dr Ali Uğur, states that notwithstanding strong growth in 2018 in the rate of new dwelling completion it will likely take until 2021 before housing supply will match current demand:

If dwelling completions were to continue their strong growth rate of around 25% in the last quarter of this year, new dwelling completions should be around 18,000 units for the full year.  Assuming a growth rate of around 25% per annum in the short term for completions, it would take until 2021 for supply to meet the estimated demand of around 35,000 units per annum – notwithstanding the fact that latent demand will not have been addressed during this period.”  And he goes on to state that “as long as the construction sector does not hit any significant blockages in terms of staff requirements, completion numbers are likely to be around 22,000 units in 2019 with current growth rates observed in commencement numbers.”

Assessing property prices published by the CSO, Ali Uğur also highlights the widening gap which has been emerging since 2014 between new and existing homes in terms of median prices:

“In addition to the regional divergences we see in residential property price changes in Ireland, there is a widening gap between new and existing homes in terms of median prices, particularly since early 2014. According to the twelve-month rolling average, at the end of 2013, the median price of a new and existing home was around €159,000 and €155,000, respectively, whereas by September 2018 the median price of a new home had more than doubled to €330,000 and the existing home median price had gone up by 40% to about €217,000 – notwithstanding the difference in quality between new and existing homes.”

The Housing Market Monitor also confirms overall growth in mortgage lending activity.  The total value of drawdowns in the first nine months of the year was €6.1 billion compared to €5.1 billion in the same period of 2017.  FTBs and mover purchasers accounted for around 48.7% and 32.8% of the total mortgage drawdowns in the third quarter of 2018 respectively.  The level of approvals from lenders has also increased, amounting to €8.6 billion to end-October compared to around €7.8 billion during the same period in 2017.

 

Note: 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

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