In the year to March, residential property prices
at a national level, fell by 3%. This compares with an annual rate of decline of
2.6% in February and a decline of 16.3% recorded in the twelve months to March
2012, according to the CSO today. Residential property prices fell by 0.5% in
the month of March. This compares with a decrease of 1.5% recorded in February.
Prices were unchanged in the month of March of last year.
In Dublin residential property prices fell by
0.8% in March but were 1.4% higher than a year ago. Dublin house prices fell by
0.3% in the month but were 1.5% higher compared to a year earlier. Dublin
apartment prices were 2.2% lower when compared with the same month of 2012.
However, the CSO said it should be noted that the sub-indices for
apartments are based on low volumes of observed transactions and consequently
suffer from greater volatility than other series.
The price of residential properties in the Rest
of Ireland (i.e. excluding Dublin) fell by 0.3% in March compared with a decline
of 0.6% in March last year. Prices were 5.8% lower than in March 2012.
House prices in Dublin are 55% lower than at their highest level
in early 2007. Apartments in Dublin are 62% lower than they were in March 2007.
Residential property prices in Dublin are 56% lower than at their highest level
in March 2007. The fall in the price of residential properties in the Rest of
Ireland is somewhat lower at 49%. Overall, the national index is 51% lower than
its highest level in 2007. .
Conall Mac Coille, chief economist of
Davy commented: "Irish residential property prices
fell 0.5% in March, the fourth consecutive monthly decline; prices are now down
1.7% three-month on three-month and 3% year-on-year. The recent down-turn in
prices probably reflects buoyant activity towards the end of 2012 as
transactions were rushed to avail of mortgage interest relief. Housing market
transactions have fallen 50% in Q1 over Q4.
Today's residential property price release shows a 0.5% month-on-month fall in
March. This means property prices are down 3% year-on-year (yoy) compared with
-2.6% in February. Residential property prices have now declined for four
consecutive months. March was the first time since January 2012 that the annual
pace of decline has increased significantly.
House prices fell by 0.3% on the month, down 3% on the year. House prices in
Dublin are up 1.5% but are down 6% outside the capital. The CSO index suggests
that apartment prices are down 1.4% yoy. But apartment prices have been
exceptionally volatile – up 7.1% in February and down 7.0% in March.
Today's release suggests the housing market may have cooled in early 2013
following the expiration of mortgage interest relief. Three-month on three-month
house price inflation peaked at +1.3% in November but has fallen back to -2%
(see Figure 1). In Dublin, the three-month growth of house prices is now back in
negative territory (-0.7%) after two months of consecutive declines.
The Property Price Register indicates that transactions in Q1 2013 were up 4.2%
yoy but down 51.6% on Q4 2012. House prices probably benefitted from purchasers
rushing to complete transactions to avail of mortgage interest relief at the end
of 2012. But both prices and transactions have fallen back in early 2013.
The Central Bank of Ireland's Bank Lending survey, published yesterday,
indicated that demand for new mortgage lending increased in Q1 2013 and is
expected to expand further in Q2 2013. Furthermore, lenders reported that
improved confidence in housing market prospects and the economy were the key
factors driving demand. So sentiment towards the housing market remains buoyant.
Indeed, the emergence of cash buyers, now accounting for more than 40% of
transactions, is ample evidence that investors have realised Irish house prices
appear under-valued from a medium-term perspective.
So today's price data most likely reflect volatility following a strong end to
2012. Nonetheless, the underlying strength of house prices may be weaker than
had been appreciated. Going forward, the improvement in affordability will
underpin house prices. But constrained mortgage lending, and increased supply of
repossessed homes, will limit the pace of the recovery."
Juliet Tennent, economist at Goodbody,
"March property prices disappoint: House
price performance disappointed again in March with the CSO data showing that
nationally prices fell by 0.5% mom, their fourth consecutive monthly decrease.
This sees the annual rate of decline reach -3%, the first acceleration in this
rate since May 2012. A combination of improved price transparency and lower
levels of activity, following the mortgage interest relief (MIR) inspired surge
at the end of 2012, may be having a negative impact. However, considerable
regional variations continue to be a key feature.
MIR impact still evident in transaction
data: Transactions, registered on the Property Price
Register, thus far in March are running at 8% lower yoy. However, the delayed
nature of the transaction data means that this does not provide the full
picture. The more complete February data shows that transaction increased by 4%
yoy. This is still a long way short of the average annual increase of 57% seen
in the final three months of 2012, as purchasers raced to take advantage of MIR
before it expired. Underlying trends remain broadly positive, with transactions
for the first three months 4% ahead of the same period last year. However,
activity levels remain low which contributes to the volatility seen in the
monthly price data.
Regional variations remain key:
Dublin prices continue to outperform the rest of the country. On a monthly basis
prices fell by 0.8% in the capital but this was mainly driven by a 7.2% fall in
apartment prices. This gives back some of the 13% price increase recorded for
Dublin apartments in the previous 3 months and highlights the volatility in the
data which the CSO notes is as a result of low volumes. Dublin house prices fell
by a more modest 0.3% mom but on an annual basis increased for third consecutive
month albeit by a slower 1.5% yoy (+2.5% yoy in February).
An uneven recovery:
Despite the slowdown in the property market associated with the ending of the
MIR at the end of 2012, housing indicators still appear to point to
stabilisation. The fledgling recovery in the Dublin market remains in train and
as we pointed out in our Q2 2013 Health Check (released on 23rd April) tight
supply should continue to underpin prices in the capital. However, the weakness
seen in prices in the opening quarter highlight the headwinds that still exist,
with tight credit conditions central to this. An increase in repossessions due
to more proactive arrears management expected in the second half of 2013 also
poses a downside risk to prices."
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