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Increasing Drift of First-Time Buyers to Dublin Commuter Belt – BPFI Housing Market Monitor

5th December 2019

Encouraging signs on property supply

The latest Housing Market Montior Q3 2019 published today by Banking & Payments Federation Ireland (BPFI) shows that, as average house prices continue to increase across the country but particularly in the capital, there has been an increasing drift of first time buyers moving to the Dublin commuter belt (Louth, Meath, Kildare and Wicklow). The Monitor also points to increased activity across key indicators including  housing supply and mortgage activity.

Drawing on BPFI’s unique loan-level data as well as a range of published data for its assessment of the current state of the housing market, the latest BPFI Housing Market Monitor draws attention to some key findings as follows:

  • Housing supply continued its upward trend in Q3 2019, mainly driven by a significant increase in apartment building, albeit from a low base. The number of apartment completions increased by around 81% in the quarter compared with the same period in 2018, accounting for nearly one fifth of all completions during the third quarter of 2019. This is the highest share since 2011 when the current CSO data series began.
  • Some 7,600 dwelling units were commenced in Q3 2019, bringing the total number of commencements to 19,856 units in the first nine months of 2019, up 22% on the same period last year.
  • Irish mortgage activity, in terms of drawdowns and approvals, more than tripled between 2011 and 2018. Most recently mortgage approval volumes rose by 8.8% year-on-year in Q3 2019 and mortgage drawdown volumes grew by 8.5% in the same period.
  • Reflecting higher average house prices in Dublin compared to other regions:
    • There has been an increasing drift of first-time-buyers moving to the Dublin commuter belt with 41% of first-timebuyer (FTB) mortgages on property in this area involving buyers moving county.
    • Some 77% of those FTBs moving county and buying property in the Dublin commuter belt are from Dublin while 31% of those moving county and buying in the Rest of Leinster region came from Dublin.

The Share of FTBs Moving County by Property Region graph below provides more detail.

Source: BPFI Loan-level data analysis

 

Providing his assessment of these market developments, Ali Uğur, Chief Economist, BPFI, explains that despite stabilising house prices and encouraging signs in relation to housing supply, FTBs continue to face affordability challenges which are placing serious limitations on where they can afford to buy, particularly in Dublin. This is reflected in the increasing shift of buyers  to areas outside of Dublin which is likely to negatively impact not only these regions but the wider economy in general:

“Regional mobility perhaps shows the flexibility of the workforce in the Irish economy, however it should be noted that the pattern of more residential housing activity taking place in the Dublin Commuter belt is likely to put pressure on the infrastructural needs in these areas, which is likely to have a negative impact on the overall competitiveness of the Irish economy.

In addition, price developments are seriously limiting potential buyers’ preference, particularly FTBs, to live in areas closer to where they work or currently live, as average income levels of this cohort of potential customers are affected by the macroprudential framework in place for mortgage lending taking into account average price levels, particularly in Dublin.”

The BPFI Housing Market Monitor is available on the BPFI website here.

 

Notes: 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 some 100 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, 087 9016880 or jillian.heffernan@bpfi.ie

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